Gifts from Indian residents now taxable for NRIs -India’s new budget

Gifts valued above Rs 50,000  [Dh2,700] will be taxable under this scheme.

Gifts to be taxed for NRIs: Indian Budget2019
pic credit: india2dubai Archives

From this year a new tax may come into picture for the valuable gifts being transferred to loved ones across the globe from July 5 th 2019 . From this year with the Budget 2019-20 its proposed to impose withholding tax for all such transfers, plugging an earlier loophole that allowed its tax-free treatment.

The Finance Bill 2019 has imposed tax on any sum of money paid or any property situated in India, transferred by a person resident in India to a person outside India, as it would be deemed to accrue or arise in India.

From July 5, all gifts to NRIs will be income accruing (originating) in India and would be taxed as per the normal slab rates applicable to resident Indians. This means that the origin of the gift becomes important for tax purpose, instead of the destination of the gift abroad.

The onus will be on the recipient (the NRI in this case) of the gift to disclose such gifts received if they originate in India and then pay a tax on it.

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