Gift Tax and NRIs

Written by Vidya Kumar

April 17, 2014

Do NRIs have to pay gift tax? What is the tax treatment if NRIs receive gifts? What is a gift deed? We have tried to answer such questions around gift tax in this article.
Non Resident Indians (NRIs) are Indians who are living abroad. They could be in employment in a different country, having a business abroad or just staying abroad. To qualify as an NRI, a person should be staying abroad for 182 days or more in that year or is not in India for the four preceding years and not in India for 60 days or more in the current year.

NRIs can send gifts in cash or kind to relatives and non-relatives even if it is through NRE or FCNB accounts. Here is a summary of gifts, recipients and tax implications.
*Relatives are defined by the diagram below –
NRIs have to file income tax returns if they earn income (e.g. income from investments) in India. The gift received will be clubbed with this income in case it has to be taxed.

It is useful to document the gift transaction. Gifts in cash or through cheques can be documented in a plain paper for future reference. If a movable property is being gifted, the gift deed should be made with details of person giving the gift and the recipient and relation between then in a stamp paper and it should be notarized. If it is an immovable property, the gift deed should be registered and signed by donor with all relevant details included.

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