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Gift tax - please clarify

Ignesius (Student) (62 Points)

06 July 2019

Dear Experts

The budget announced yesterday introduced changes to Gift tax for NRIs. It says that the gifts given by Indian residents to non-resident Indians are taxable as regular income.

What about gift received by a father(in India) from NRI son ( working abroad) for parental maintenance. Is there any change to receipt into India ?

Thanks for the time & attention. Regards - Ignesius

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (178114 Points)
Replied 07 July 2019

Its advisable to read the details of announcements made first before jumping to any doubt.

Just to satisfy you, there is no change in that provision.

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (178114 Points)
Replied 07 July 2019

Proposal by FM during presentation of budget 2019-20::

Deemed accrual of gift made to a person outside India:

Section 9 of the Act relates to Income deemed to accrue or arise in India. Under the Act, non –residents are taxable in India in respect of income that accrues or arises in India or is received in India or is deemed to accrue or arise in India or is deemed to be received in India. Under the existing provisions of the Act, a gift of money or property is taxed in the hands of donee, except for certain exemptions provided in clause (x) of sub-section (2) of section 56. It has been reported that gifts are made by persons being residents in India to persons outside India and are claimed to be non-taxable in India as the income does not accrue or arise in India. To ensure that such gifts made by residents to persons outside India are subject to tax, it is proposed to provide that income of the nature referred to in sub-clause (xviia) of clause (24) of section 2, arising from any sum of money paid, or any property situate in India transferred, on or after 5th July, 2019 by a person resident in India to a person outside India shall be deemed to accrue or arise in India. However, the existing provision for exempting gifts as provided in proviso to clause (x) of sub-section (2) of section 56 will continue to apply for such gifts deemed to accrue or arise in India. In a treaty situation, the relevant article of applicable DTAA shall continue to apply for such gifts as well.

This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years.

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