I am an 83-year-old widow. Can my son, who became a non-resident Indian (NRI) recently, transfer money from his non resident (ordinary) or NRO account to my resident account? Are there any tax restrictions or implications?
Under the exchange control law, all payments within India in Indian rupees are allowed from an NRO account. There is no limit on such transfer of funds. Accordingly, your son may transfer funds from his NRO account to your resident account.
There are no tax implications on transfer of funds from your son’s NRO account to your resident account. Gifts received by mother from son are exempt from tax. However, note that any income earned from such funds in your bank account (such as interest income) will be taxable in your hands. Deduction under Section 80TTB may be available on interest income up to ₹50,000.
I am an NRI living in Canada. My niece is getting married. What is the tax implication if I gift something like cash or gold to a relative who is a resident Indian?
Tax is levied on any sum of money, moveable or immoveable property (specified property) received in excess of ₹50,000 by an individual without consideration or for inadequate consideration, except gifts received from a relative or on marriage or by way of inheritance or other specified exclusions.
The term “relative" includes 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, spouse of any of the persons referred above and spouse of the individual. The above definition of “relative" needs to be seen from the perspective of the recipient. Thus, if the niece is receiving any specified property from the brother or sister of either of the parents, there will be no tax implications in India. In any case, there will be no Indian tax implication in the hands of your niece if receipt of gifts (either cash or gold) is on the occasion of marriage. However, document the gift to enable you or your niece to respond to any inquiries from the tax authorities. You may also be required to share your creditworthiness and source of funds for making the gift in case of inquiries.
Sonu Iyer is tax partner and people advisory services leader, EY India.