|Courtsey – “The Times of India”
Say cheers to liberal overseas remittances!
While NRIs Are Permitted Bonafide Remittances of Up To $1 Million Even Resident Indians Can Invest or Gift $2,00,000 Each Year
Q: One of my relatives who is settled in the US for the past many years is in need of some funds there. He has investments in his name in India made prior to his leaving India. Can he transfer any funds from the same to the US. Alternatively, can I send a gift to my relative in US dollars from my funds in India? I request you to advise the best way to transfer the amount in dollars to US without any adverse consequences here.
Hitesh Bhatt – via sms
A: You can ask your relative to feel assured that his need of funds in the US can be comfortably taken care of without any difficulty. Under its latest master circular No. 03/2007-08, the Reserve Bank of India (RBI) has confirmed that remittance from the balances lying in a non-resident ordinary (NRO) account, up to $1 million per financial year, is permitted for all bonafide purposes, to the satisfaction of the authorized dealer bank. It also needs to be noted that RBI has further instructed banks entitled to deal in foreign exchange to effect all such remittances without approval from RBI.
Relying on the above, your relative can ask his Indian bank to convert the rupee balance from his NRO account and request for remittance of the desired amount in US dollars in his favour to the credit of his bank account in the US. Of course, he will need to discharge his tax obligation, if any, in respect of the funds being credited to his NRO account for purposes of the remittance and submit an appropriate certificate from a chartered accountant in this regard to his bank.
Alternatively, you as a resident Indian can avail of the benefit of the liberalized remittance scheme, under which all resident individuals are free to acquire and hold immovable property or shares or any other asset outside India or make remittances towards gift or donation, up to $2,00,000 per financial year without prior approval of the Reserve Bank. Accordingly you can remit up to $2,00,000 at one go as a gift to your relative by requesting your bank to do so.
GIFT FROM NRI SON
Q: Reading Taxing Times which is so interesting has prompted me to ask this question. My son, who is in US, wants me to buy a car in India and wants to send equivalent of Rs 4 lakh for the purpose. What would be the best option so that money does not become taxable? Should the car be purchased on his name?
R S Nigam, Vadodara
A: Glad to know that you like this column. Since the car is to be used by you in India, it would be better to name. He can send any amount as a gift in your name which can be deposited in your account and used by you. A gift of money by a son to his father is totally exempt, irrespective of its monetary value and the destination from where it is sent. Hence you need not worry about any tax liability in respect of the same.