By Neeraj Agarwal
My wife and I are NRIs living in Dubai. She wants to gift some money to her sister in India. What will be the tax treatment and can it be transferred from her Dubai bank account?
—Madhav Nair
Your wife can gift money to her sister in India without any tax liability for either party, as it qualifies as a gift to a relative under Indian tax laws. According to Section 56 of the Income-tax Act, any gift received from a specified relative, including a sister, is fully exempt from income tax. The money can be directly transferred from your wife’s Dubai bank account to her sister’s bank account in India, provided the transaction complies with the Foreign Exchange Management Act (FEMA) regulations. Gift remittances are allowed under FEMA, and there are no specific restrictions on transferring money from an NRI’s foreign bank account to an Indian resident for this purpose. It is advisable to use proper banking channels, such as wire transfers or remittance services, to ensure transparency and maintain a clear record of the transaction. While not mandatory, documenting the gift through a simple gift deed can serve as evidence of the transaction if needed in the future.
Also ReadNo way to declare exempt gift in ITR
My son is staying in the UK. His income in India consists of interest from bank fixed deposits, capital gains from mutual fund redemptions and rent from property. He files Income Tax Return (ITR) in India every year and also shows Indian incomes in his tax returns filed in the UK. Is he following the right procedure?
—Prakash Chauhan
Your son is following the correct procedure. Under the Indian Income-tax Act, filing a return is mandatory for individuals whose total income exceeds Rs 2.5 lakh. Since your son has income accruing from India—such as interest, rent, capital gains, or dividends—it is advisable for him to file an ITR, whether it is mandatory under the law or done voluntarily. Filing voluntarily can help bring all incomes on record and avoid potential litigations in the future.Moreover, any taxes paid in India can be claimed as a credit against his UK tax liability, thereby avoiding double taxation. This is facilitated through the provisions of the tax treaty between India and the UK.
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