Gifts given to NRI From a taxation perspective in India, any money or property received without consideration or inadequate consideration can be considered a gift and taxed in the hands of the recipient. If the recipient is NRI the amount received is ‘Income from other sources’. If the aggregate value of such sum of money received during the year exceeds Rs.50,000, same can be taxable to the full extent of the gift amount.
There are certain exceptions to gift taxability. Key examples, in case of individuals are noted:
1) money received from relatives, which is defined as
a. Spouse of the individual; b. Brother or sister of the individual; c. Brother or sister of the spouse of the individual; d. Brother or sister of either of the parents of the individual; e. Any lineal ascendant or descendent of the individual; f. Any lineal ascendant or descendent of the spouse of the individual g. Spouse of the persons referred to in (b) to (f).
2) Money received on the occasion of the marriage of the individual.
3) Money received under will/ by way of inheritance.
In case of immovable property, the excess of stamp duty value over the purchase price of the property will be treated as income of the purchaser.
In case of movable property, only prescribed movable property are coved for gift tax, namely shares/securities, jewelry, archaeological collections, drawings, paintings, sculptures or any work of art and bullion, being capital asset of the taxpayer. Other items such laptop, TV are excluded.
Recently, via the Finance Act of 2019, gifts made after 05-07-2019 by Indian Residents to Non Resident person (NRI) was also made subject to tax in India, in the hands of the NRI by making it deemed to accrue or arise in India (section 9 of Income tax act).
Gifts given by a NRI to a Relatives in India who are Residents, then both giver and receiver are exempt from tax in India. When the person in India is not a Relative, and the amount is more than Rupees 50,000 then the receiver has to include the amount as taxable income.
Refer the Income Tax website for more details on taxability of gifts in India, with examples.
