My father is gifting me cash in my non-resident strange (NRO) account through a present deed. I’ll switch this cash to my non-residential exterior (NRE) account. Is this cash taxable? Also, is there any restrict on the cash that may be transferred in a 12 months? Lastly, will there be any tax implications in the US?
Under the revenue tax legislation, any sum exceeding ₹50,000 received with out consideration from any individual is taxable in the hands of the recipient. However, items from specified family members aren’t liable to tax. So there’ll no tax implications in India on switch of funds from your father’s account to your NRO account after which to your NRE account.
However, any revenue earned from such funds in your NRO account (corresponding to curiosity revenue) might be taxable. Deduction beneath Section 80TTA could also be obtainable on curiosity revenue as much as ₹10,000 earned on financial savings account by a person who is not a senior citizen. Interest revenue from NRE accounts is exempt from tax in India if you happen to qualify as a “individual resident outdoors India” beneath the trade management legislation or if you’re permitted by the Reserve Bank of India (RBI) to keep up such an account. The guidelines for figuring out residential standing beneath the trade management legislation are completely different from that beneath the revenue tax legislation.
You can avail the profit of double tax avoidance treaty between India and the nation of your residence for the price of tax payable on curiosity on NRO account, topic to furnishing of tax residency certificates and different paperwork, and declare credit score of taxes paid in India towards your tax legal responsibility in the nation of residency.
NRIs are allowed to remit or switch as much as $1 million from an NRO to NRE account by producing vital documentary proof. Remittance exceeding ₹1 million requires particular permission from RBI.
Sonu Iyer is tax accomplice and folks advisory companies chief, EY India. Queries at [email protected]