My father is gifting me dollars in my non-resident common (NRO) account by means of a gift deed. I will transfer this income to my non-residential external (NRE) account. Is this cash taxable? Also, is there any restrict on the cash that can be transferred in a year? Last of all, will there be any tax implications in the US?
Below the cash flow tax law, any sum exceeding ₹50,000 acquired devoid of consideration from any human being is taxable in the arms of the recipient. However, presents from specified kinfolk are not liable to tax. So there will no tax implications in India on transfer of funds from your father’s account to your NRO account and then to your NRE account.
Nonetheless, any income attained from this sort of cash in your NRO account (this kind of as interest revenue) will be taxable. Deduction under Part 80TTA may perhaps be offered on interest earnings up to ₹10,000 gained on financial savings account by an particular person who is not a senior citizen. Interest money from NRE accounts is exempt from tax in India if you qualify as a “person resident outside India” beneath the trade control legislation or if you are permitted by the Reserve Bank of India (RBI) to keep these types of an account. The principles for pinpointing residential position less than the exchange control legislation are different from that underneath the earnings tax law.
You can avail the profit of double tax avoidance treaty among India and the region of your residence for the rate of tax payable on interest on NRO account, issue to furnishing of tax residency certificate and other paperwork, and claim credit of taxes paid out in India versus your tax liability in the place of residency.
NRIs are permitted to remit or transfer up to $1 million from an NRO to NRE account by producing vital documentary evidence. Remittance exceeding ₹1 million involves exclusive permission from RBI.
Sonu Iyer is tax partner and individuals advisory expert services chief, EY India. Queries at email@example.com
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