One of my Friend working in Japan wants to gift money to his father in India. He raised a Loan from his company & the company will deduct this from his salary in future. Now whether it in any way be taxable in India & is there any Limit on the amount he can transfer. Also my friends residential status is ordinary resident since he stayed for more than 182 days in india in FY 2011-12.
02 May 2012
Since your friend is ordinary resident his all income (including global income) will be taxable in India. However, he can claim the benefit under DTA for tax paid in Japan. Further since gift from son to father is exempt, therefore gift made will not be form part of total income of his father.
Relevant provisions of DTAA between India and Japan : ARTICLE 15 - 1. Subject to the provisions of articles 16, 18, 19, 20 and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that Contracting State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned Contracting State, if :
(a) the recipient is present in that other Contracting State for a period or periods not exceeding in the aggregate 183 days during any taxable year or previous year, as the case may be ; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of that other Contracting State ; and
(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in that other Contracting State.
(3) Notwithstanding the provisions of paragraphs 1 and 2, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that Contracting State.
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