Foreign remittance
This query is : Resolved
19 May 2012
Sir,
I have client whose received some money from their son in foreign currency as a gift and the receiver (i.e. Client) returned the same to his son in their indian bank account, whether the transaction attract any income tax and whether the same is questionable under any provisions of law as time being enforceable like FEMA or else.
Sir,
I have client whose received some money from their son in foreign currency as a gift and the receiver (i.e. Client) returned the same to his son in their indian bank account, whether the transaction attract any income tax and whether the same is questionable under any provisions of law as time being enforceable like FEMA or else.
19 May 2012
Gift received from relatives is not taxable.
But in this case gift received in FC, it is always advisable to receive gift in money through bank.
If the amount is not very big than there is not an issue. Otherwise if you have to provide sufficient explanations.
But in this case gift received in FC, it is always advisable to receive gift in money through bank.
If the amount is not very big than there is not an issue. Otherwise if you have to provide sufficient explanations.
19 May 2012
Sir,
Please the same is received through Bank and amount is big, then what are the issue will arise and in which act.
Sir,
Please the same is received through Bank and amount is big, then what are the issue will arise and in which act.
25 July 2024
In the scenario where your client received money from their son abroad as a gift in foreign currency, and subsequently returned the same amount to their son's Indian bank account, several aspects need to be considered regarding Indian tax and regulatory implications:
### Income Tax Implications:
1. **Gift Tax in India:**
- Gifts received from relatives (which include son) are generally not taxable under Indian Income Tax Act. However, if the aggregate value of gifts received from any person exceeds Rs. 50,000 in a financial year, the entire amount is taxable as income in the hands of the recipient, except when received from specified relatives (which includes son).
- Since the gift is from the son, it should not be taxable in India irrespective of the amount received.
2. **Return of Gift:**
- When your client returns the gift amount to their son, it generally does not attract any income tax implications because the original receipt was not taxable.
### Regulatory Considerations:
1. **FEMA (Foreign Exchange Management Act):**
- FEMA governs foreign exchange transactions in India. Gifts from a person resident outside India (like the son) to a person resident in India (like your client) are permissible under FEMA.
- The remittance of funds back to the son's Indian bank account by your client should also comply with FEMA regulations regarding foreign remittances.
### Practical Steps:
1. **Documentation:**
- Ensure proper documentation of the gift transaction, including any communication or bank records, to substantiate the nature of the transaction as a gift.
2. **Bank Transactions:**
- Conduct all transactions through authorized banking channels to comply with FEMA regulations.
3. **Tax Reporting:**
- Even though the gift received is not taxable, it’s advisable to maintain records and disclose such transactions appropriately in tax filings to avoid any potential queries from tax authorities.
### Conclusion:
In summary, the transaction of receiving a gift from a son abroad and subsequently returning the same amount to their Indian account is generally permissible under Indian tax and FEMA regulations, provided it is properly documented and conducted through banking channels. There should not be any income tax implications since the original receipt was a gift, and it is returned to the same source. However, for specific advice tailored to your client's situation, consulting with a tax advisor or legal expert familiar with Indian tax laws and FEMA regulations would be prudent. They can provide guidance based on the detailed specifics of the transaction and ensure compliance with all applicable laws.
### Income Tax Implications:
1. **Gift Tax in India:**
- Gifts received from relatives (which include son) are generally not taxable under Indian Income Tax Act. However, if the aggregate value of gifts received from any person exceeds Rs. 50,000 in a financial year, the entire amount is taxable as income in the hands of the recipient, except when received from specified relatives (which includes son).
- Since the gift is from the son, it should not be taxable in India irrespective of the amount received.
2. **Return of Gift:**
- When your client returns the gift amount to their son, it generally does not attract any income tax implications because the original receipt was not taxable.
### Regulatory Considerations:
1. **FEMA (Foreign Exchange Management Act):**
- FEMA governs foreign exchange transactions in India. Gifts from a person resident outside India (like the son) to a person resident in India (like your client) are permissible under FEMA.
- The remittance of funds back to the son's Indian bank account by your client should also comply with FEMA regulations regarding foreign remittances.
### Practical Steps:
1. **Documentation:**
- Ensure proper documentation of the gift transaction, including any communication or bank records, to substantiate the nature of the transaction as a gift.
2. **Bank Transactions:**
- Conduct all transactions through authorized banking channels to comply with FEMA regulations.
3. **Tax Reporting:**
- Even though the gift received is not taxable, it’s advisable to maintain records and disclose such transactions appropriately in tax filings to avoid any potential queries from tax authorities.
### Conclusion:
In summary, the transaction of receiving a gift from a son abroad and subsequently returning the same amount to their Indian account is generally permissible under Indian tax and FEMA regulations, provided it is properly documented and conducted through banking channels. There should not be any income tax implications since the original receipt was a gift, and it is returned to the same source. However, for specific advice tailored to your client's situation, consulting with a tax advisor or legal expert familiar with Indian tax laws and FEMA regulations would be prudent. They can provide guidance based on the detailed specifics of the transaction and ensure compliance with all applicable laws.
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