I am 70 years Old and Resident Indian, My Son is NRI I want to gift him some money near about 15,00,000/- I want to know what will be my tax liability in India. What will be the liability of my Son. What Documents we have to prepare. Whether we have to pay any tax for such transaction. Dr. Mehta , Mumbai
First of all you should be happy to know that under section 56(2)(vi) I T Act, gift by a blood relative is not considered as income .
In case of gift by a resident to a non resident , involvement of RBI comes in because the matter relate to FEMA. Thanks to burgeoning foreign exchange kitty of India, Reserve Bank Of India introduced Liberalised Remittance Scheme under which now Indian resident can give gift or donation of US D 2,00,000 in one Financial Year to any one resident outside India which includes charitable/educational /religious trusts etc. Read below the FAQ given on RBI site
18. How much foreign exchange can a resident individual send as gift / donation
to a person resident outside India?Limit of USD 200,000 per financial year under
the Liberalised Remittance Scheme would also include remittances towards gift
and donation by a resident individual. Accordingly, under the Scheme, any
resident individual, if he so desires, may remit the entire limit of USD 200,000
in one financial year as gift to a person residing outside India or as donation
to a charitable/educational/ religious/cultural organization outside India.
Remittances exceeding the limit will require prior permission from the Reserve
Bank.
What should be the process?As can be seen , no approval is required for gift of USD 2,00,000 in one financial year. However, as person giving gift should prepare a gift deed stating clearly :
- The name and address of the person whom gift is being given.
- The mode of giving gift.
- The deed should be signed by the person giving gift .
- The person getting gift should sign the gift deed accepting the gift.
- The gift deed should be notarized in the local court where the donor resides.
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