Gifting has long been a meaningful way for non-resident Indians to support parents, siblings and relatives back home. But when gifts move across borders, they fall under a mix of tax rules and FEMA regulations aimed at preventing misuse, tax evasion and money laundering. Understanding these rules is essential for NRIs to ensure that well-intended financial help does not create unexpected tax trouble.
Yes, NRIs are allowed to transfer money to their parents in India without any tax liability. Gifts may take the form of cash transfers, property, shares or other assets, and such transfers are fully permitted under FEMA.
The responsibility for tax arises only on the recipient and only under certain situations. When the gift comes from a close relative—as defined by income tax law—there is no tax, regardless of the value. Since parents fall within this category, these transfers remain tax-free.
The tax treatment depends largely on the relationship between the giver and the receiver. If an NRI gifts money to a resident who is not a relative and the total value exceeds ₹50,000 in a financial year, the entire amount becomes taxable for the recipient. Even though the NRI is not liable to pay tax in India for giving the gift, the recipient must disclose it under 'Income from Other Sources.'
If the direction is reversed—when a resident sends money to an NRI—tax obligations depend on relationship and FEMA limits. A resident can send up to USD 250,000 annually under the Liberalised Remittance Scheme, but only gifts to recognised relatives remain tax-free. Anything outside this category is treated as taxable income for the NRI.
In cases where an NRI gifts another NRI, the gift generally remains outside India’s tax net unless the recipient earns income from India. But the same ₹50,000 rule applies when the giver is a non-relative.
Several categories of gifts remain fully exempt from tax in India. Gifts received from specified relatives have no upper limit. Wedding-related gifts—whether in the form of cash, property or jewellery—are tax-free when linked to the marriage ceremony. Inherited assets or those received through a will are also exempt.
Gifts from registered institutions, such as educational bodies, medical organisations, charitable trusts registered under section 12A or 12AA, and local authorities, are not taxed either.
Cross-border gifting requires clear records. High-value gifts often need a formal gift deed, copies of bank transfers, proof of relationship where applicable, and valuation certificates in the case of property or jewellery. NRIs may need FEMA declarations, RBI reporting for large amounts and tax residency documents if they are claiming treaty benefits.
Any taxable gift must be declared in the income-tax return under the “Income from Other Sources” category. Depending on the taxpayer’s situation, the disclosure falls under ITR-2 or ITR-3. Digital copies of all related documents are expected to be kept ready.
When residents gift money to NRIs, they must follow Liberalised Remittance Scheme guidelines and may have to report transactions to the RBI, especially when values exceed ₹10,00,000.
For most NRIs, gifting money or assets to family remains a simple and lawful process. The complexities arise only when the value crosses exemptions, the relationship falls outside the “relative” definition, or the documentation is incomplete. With the right compliance, gifting continues to be one of the easiest ways for NRIs to support loved ones in India without attracting additional tax burdens.
