TAX ON GIFT OF MONEY BY FATHER TO DAUGHTER LIVING IN USA(NRI)

[NISHANT SHAH]

Dear All,

I want to know that whether tax is levied on recipient of gift from relative in India with effect from Finance Act, 2019.??

I heard that a resident indian can gift upto $2,50,000 to his/her relative(NRI) living in USA as per liberalized remittance scheme. Please suggest me how much money a father can gift( resident in india) to her NRI Daughter living in USA??

[DEV KUMAR KOTHARI]

Q. I want to know that whether tax is levied on recipient of gift from relative in India with effect from Finance Act, 2019.??

Ans. There seems no tax under Income Tax Act, 1961. Gift from father to daughter is a capital and personal outgo in hands of father and capital receipt in hands of daughter.

Regarding remittances permitted- check website of RBI at the time of remittance because there can be changes frequently.

I believe that in USA also amount received by daughter from father ( from India) will also be capital receipt. However , check with US tax consultants in this regard.

If you have any specific provision in mind, mention in the query. In query raised some home work must be reflected for sharing knowledge and discussion.

[NISHANT SHAH]

Ok thanks Sir for your valuable reply.

I understand that father can gift to her daughter and no taxability arised from father point of view but I doubt that tax would be levied to daughter living in USA as receipient of gift income from father who is resident in india according to law of USA.

Needs more clarity in this issue. If someone who is expert in this, they may please suggest their view on taxability on foreigner NRI taking gift from Indian relative..

Whether tax is levied on receipient in USA since according to my knowledge, USA law is changed for declaring even gift amount in their ITR as income and they are required to pay tax at there considering it as global income ??

[Ganeshan Kalyani]

I agree with Sri Kothari Sir, US consultant to be consulted.

[NISHANT SHAH]

OK Sir Thank you..

AI Summary

Gift taxation: familial gifts from a parent are not taxed under domestic law; verify remittance rules and foreign tax treatment. Gifts from a father to his daughter are not treated as taxable income under domestic income tax law, characterised as a capital outgo for the donor and a capital receipt for the recipient. Remittances must comply with current RBI/Liberalised Remittance Scheme limits at the time of transfer. The foreign tax treatment is uncertain in the recipient's jurisdiction and a US tax consultant should be consulted to determine reporting and tax obligations.