Gift from certain relatives is tax free in India

Tax queries of NRIs, answered by Sonu Iyer, tax partner and people advisory services leader, EY India


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After living in the US for 10 years, I returned to India last week. Will my rupee deposits in Indian accounts be taxed differently with the change in my residential status?

—Nagesh Hariharan

Interest earned on non-resident external (NRE) and foreign currency non-resident (FCNR) accounts is not taxable in India until you qualify as a ‘resident’ and ‘ordinarily resident’ for tax in India.

Interest earned on a non-resident ordinary (NRO) account is taxable in India irrespective of your tax residential status. So, it is likely that there is no immediate impact on your taxability in India.

Interest income earned from savings bank accounts in India is eligible for tax deduction of Rs10,000.

I have recently moved to the UK and want to remit money every month to my parents who live in India. Who will be taxed for this?

—Rajat Gulati

Remittance from the UK every month to your parents in India is not liable to tax in India either in your or your parents’ hands. There is a specific exemption under Indian income tax laws on cash or gifts from relatives.

I am an NRI in Canada and want to buy agricultural land jointly with my brother in Punjab. How will the transaction be taxed?

—Harsimran Bhramra

There is no income tax implication on purchase of immovable property.

However, under the Indian exchange control rules (Foreign Exchange Management Act), while an NRI or a person of Indian origin (PIO) such as yourself is permitted to buy immovable property in India, purchase of agricultural land, farmhouse and plantation property is not permitted.

Therefore, gift of a commercial plot by you to your sister in India will not be liable to tax in India.

I want to gift a commercial plot worth Rs15 lakh to my sister in India. I’m a PIO based in the UK. Will she be taxed on this transaction? If yes, how will that be taxed?

—Harminder Bajwa

Gifts, including cash and immovable property, from a relative are not liable to tax in the hands of the recipient or in the hands of the person giving the gift.

A relative is defined to include spouse, brother or sister, brother or sister of the spouse, brother or sister of either of the parents, any lineal ascendant or descendant, any lineal ascendant or descendant of the spouse, and others.

Therefore, gift of a commercial plot by you to your sister in India will not be liable to tax in India.

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