Implications under FEMA, 1999:
- NRI/OCI can gift to Resident from their NRO NRE account, by remittance, in India
- However, the POA holder is not authorised to sign the cheque for the transaction relating to gift. Cheque is to be signed by the account holder only.
- NRI/OCI can even gift cash to Residents (Sec 9 FEMA) Resident cannot retain currency more than US 2000 or equivalent.
Implication under the Income Tax Act, 1961:
- There is no gift tax in India. However, gift is taxable in the hands of recipient in certain conditions.
- The amount of gifts in aggregate is in excess of Rs 50 000 per financial year.
- If the amount of gift exceeds Rs 50 000 entire amount is taxable under the head “Income from other sources”.
- The exceptions to it is, gifts received from relatives (as defined under the Income Tax Act Sec 56 (2) is exempted.
- Section 56 & 68 are independent in operation.
- Though the gift is exempted under Section 56 Section 68 of Income Tax act, has still to be satisfied.
- As per Section 68 ,,“any sum of fund is credited in the books of assesse maintained for any previous year and the assesse offers no explanation about the nature and source thereof or the explanation offered by him is not in opinion of the Assessing officer satisfactory the sum so credited may be charged to income tax as the income of the assesse of that pervious year.
- An assessee is required to prove the below mentioned details from whom gift is received
- Identity of the person
- Creditworthiness of the person
- Genuineness of the transaction
- The documents required to prove the above mentioned details vary from case to case basis
