When money comes in the form of a gift from family abroad, the tax rules can get confusing. Today's Ask Wallet-Wise decodes whether such remittances are taxable in India and if they need to be reported in the recipient’s income tax return.
Moneycontrol’s Ask Wallet-wise initiative offers expert advice on matters related to personal finance and money-related queries. You can email your queries to askwalletwise@nw18.com, and we will try and get a top financial expert to address your queries.
My wife and I are senior citizens. I retired in 2013 and my wife is a homemaker. Our daughter, who is working in the US, remits around Rs 1,25,000 every three months to my wife's account in India. I would like to know if these remittances are taxable and whether they should be declared in her tax returns. My wife's annual income is around Rs 1,00,000.
Expert’s reply: After the abolition of donor-based gift tax, gifts are now taxed in the hands of the recipient. If the aggregate value of all gifts received in a financial year exceeds Rs 50,000, the full amount becomes taxable under “Income from Other Sources” at the applicable slab rate. The Rs 50,000 threshold applies to the total value of all gifts—whether in cash or kind—received during the year.
However, gifts from certain specified relatives are fully exempt. Children are included in the definition of “relatives” under Section 56(2)(x). Therefore, the Rs 1,25,000 your daughter remits every quarter to her mother is not considered income in her mother’s hands and is fully exempt from tax.
As for disclosure, since the amount is not taxable, your wife is not required to declare it in her ITR. Similarly, your daughter is not required to disclose it in her ITR if she files in India.
Under Section 139, an individual must file an ITR if their income before deductions and exemptions exceeds the basic exemption limit. In the old tax regime, the limit is Rs 2.5 lakh for those below 60, Rs 3 lakh for senior citizens (60–80 years), and Rs 5 lakh for super senior citizens (above 80). Under the new regime, the basic exemption limit is Rs 3 lakh for all individuals. Since the gift is not treated as income and your wife’s taxable income is below the threshold, she is not required to file an ITR.
On the US side, gifts up to USD 19,000 per recipient per year are generally exempt from US gift tax. Based on the amount you mentioned, it’s unlikely your daughter’s remittance will cross that limit, but you should confirm with a US tax professional.
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