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Home >Money >Personal Finance >Money sent to mother in India isn’t taxable

I am a US-based Indian and send some money to my mother in India every month. Is the sum taxable in India?

—Abhay Singh

Under the Indian law, income tax is levied on any sum of money, moveable property (specified property such as shares, jewellery, work of art, bullion and others) or immovable property received in excess of 50,000 by an individual without consideration (without a quid pro quo) or for inadequate consideration, except gifts received from a “relative" or on marriage or by way of inheritance or other specified exclusions. Apart from spouse, 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 person referred to above.

Thus, funds sent to your mother in India, will have no tax implications in India, neither for you nor for your mother. However, any earnings on the investments (such as interest or dividends) made by your mother from those funds will be taxable in India in the hands of your mother.

I am an Indian citizen but I work for a non-profit organization in the US as a consultant. I have a one-year contract and I am paid in dollars which gets credited to my Indian bank account. I need to travel to foreign destinations for work. The organization does not have an office in India. I am not taxed in the US. How will I get taxed in India?

—Sameeran

Taxability of income in India depends on residential status, and source and place of receipt of income. In your case, the income is received directly into your bank account in India, you are liable to pay tax in India.

To deposit tax, you may follow the advance tax payment schedule: deposit 15% of total tax by 15 June; 45% by 15 September; 75% by 15 December and 100% by 15 March.

Any balance tax not paid as advance tax may be paid as self-assessment tax before filing the income tax return (ITR). However, you will be liable for interest for delay in deposit or non-deposit of advance tax.

Whether you are liable to be taxed as a “consultant" or as an “employee" will depend on the nature of your contract. If you are a “consultant", the income will be taxable under the head “profits and gains of business or profession". If you are an “employee", it will be taxable under the head “salary".

Sonu Iyer is tax partner and people advisory services leader, EY India. Queries at mintmoney@livemint.com

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