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Gifts from residents to non-residents: the ₹50,000 trigger and what follows
Under the Income Tax Act, a monetary gift received by a person becomes taxable in India when the total received in a financial year from non-relatives exceeds ₹50,000. That rule applies to non-residents as well when the donor is a resident — but there are important details and exceptions to know.
When is the gift taxable?
- If a non-resident receives money from a resident and the aggregate gifts in a year from non-relatives exceed ₹50,000, the entire amount is generally taxable in India as income from other sources.
- The ₹50,000 limit is an annual threshold — gifts received across the year are added up to determine taxability, not each gift separately.
- Taxability can depend on where the money is deemed to accrue or arise. If the transaction has an Indian nexus (for example, funds transferred from an Indian account), Indian tax rules typically apply.
Key exemptions (cases where the gift is not taxed)
- Gifts from specified relatives — relatives include parents, siblings, spouse, children, and some extended family as defined under the Act.
- Gifts received on the occasion of marriage.
- Gifts inherited or received under a will.
- Gifts from certain authorities, charitable or educational institutions and recognized funds/trusts that are specifically exempt under the law.
Practical implications and compliance
- The whole gift amount becomes taxable (not just the portion above ₹50,000) once the threshold is crossed, unless an exemption applies.
- Residents making payments to non-residents should consider withholding obligations. If the gift is taxable in India, the payer may be required to deduct tax at source under relevant sections of the Act.
- Cross-border remittances often require documentation — banks commonly ask for a gift deed, PAN details, and may require Form 15CA/15CB if tax is chargeable on the remittance.
- Maintaining clear records (gift deed, proof of relationship, bank statements) is important to establish exemptions and avoid disputes with tax authorities.
Bottom line
A single monetary gift from a resident to a non-resident can trigger an Indian tax liability when non-relative gifts in a year exceed ₹50,000. But exemptions (relatives, marriage, inheritance, certain institutions) and procedural rules (TDS, remittance documentation) matter. For cross-border gifts or large transfers, get professional tax advice and keep full documentation to ensure correct treatment and compliance.