14 May 2025Gifting is a meaningful way for Non-Resident Indians (NRIs) to support and stay connected with family and friends in India. Whether sending money, transferring property, or giving valuable assets as gifts can strengthen personal bonds across borders. Many NRIs are unaware that such gestures can have significant tax consequences under Indian law. From income tax liabilities to FEMA regulations, the rules around gifting can be complex, and ignoring them could lead to unexpected penalties. In this blog, we’ll break down everything NRIs need to know about gifting rules and the tax implications that come with them.
We specialize in providing comprehensive tax advisory services tailored for Non-Resident Indians (NRIs). Our experts help you navigate the complex tax implications of gifting assets, money transfers, and property transactions- ensuring full compliance with Indian Income Tax laws and FEMA regulations. Whether you’re planning to gift to loved ones in India or receive gifts as an NRI, we offer personalized guidance to minimize tax liability and avoid legal complications. Trust Regitom Associates to make your cross-border gifting seamless, transparent, and tax-efficient.
For tax purposes under Indian law, an individual is considered a Non-Resident Indian (NRI) if:
- They spend less than 182 days in India in a financial year.
- They spend 60 days or more in a financial year and 365 days or more over the preceding four years.
Once classified as an NRI, your financial and gift-related transactions are governed by specific rules, both under the Income Tax Act and FEMA.
Taxation of Gifts in India
- Gifts from NRIs to Indian Residents
- If the value exceeds ₹50,000 in a financial year, it is taxable in the hands of the recipient, unless it is received from a relative.
- Gifts below ₹50,000 are tax-exempt, even from non-relatives.
Gifts from the following relatives are not taxable: Parents, Children and grandchildren, Spouse, Siblings (of self or spouse), Lineal ascendants or descendants, Siblings of parents
Note: Friends, cousins, and in-laws not specifically listed are considered non-relatives.
- Gifts from NRIs to Other NRIs
- If both parties are outside India and the asset is not located in India, Indian tax laws generally do not apply.
- However, local tax laws of the country of residence (e.g., U.S., U.K.) may require disclosure or tax reporting.
Gift of Property in India
- Immovable Property
- NRIs can gift residential or commercial property to relatives in India.
- A registered gift deed is mandatory, and stamp duty must be paid.
- Tax on Sale of Gifted Property
- The recipient may have to pay capital gains tax if they sell the property in the future.
- The cost and holding period of the original owner (donor) are used for tax calculation.
FEMA Regulations on Gifts
Gifting by NRIs is also governed by the Foreign Exchange Management Act (FEMA):
- Under the Liberalized Remittance Scheme (LRS), NRIs can remit up to $250,000 per financial year.
- Gifts to Indian residents must comply with FEMA and RBI regulations.
- Gifts of shares, securities, or immovable property to NRIs or residents require adherence to specific FEMA provisions.
Receiving Gifts as an NRI
- NRIs can receive gifts from relatives in India, tax-free.
- Gifts from non-relatives exceeding ₹50,000 are taxable.
- If residing in countries like the U.S., NRIs may have to report gifts from Indian residents using forms like Form 3520 (for U.S. residents).
Documentation Required
Gift deed (for property and valuable gifts)
PAN numbers of both parties (if applicable)
Relationship proof (for claiming exemptions)
Bank and remittance records
FEMA declarations, if required
While gifting may seem simple and heartfelt, it carries significant tax and legal implications for NRIs. From income tax laws and FEMA regulations to cross-border compliance and documentation, several aspects need careful attention to avoid financial and legal complications. At Regitom Associates, we specialize in helping NRIs navigate the complexities of gifting and taxation. Our services include personalized tax consultation, preparation of gift deeds, income tax return assistance, and compliance with FEMA and RBI guidelines. Whether you're gifting money, property, or other assets, our expert team ensures that your transactions are fully compliant and stress-free. Let Regitom Associates guide you through every step of your gifting process with clarity and confidence.
What are the new rules for NRIs in India?
In 2025, India implemented significant changes to Non-Resident Indian (NRI) taxation. The "120-day rule" now classifies Indian citizens or Persons of Indian Origin (PIOs) earning over ₹15 lakh from Indian sources as residents if they stay in India for 120 days or more in a financial year and have resided in India for at least 365 days over the preceding four years. Additionally, Indian citizens earning above ₹15 lakh and not liable to tax in any other country are deemed residents, making their global income taxable in India. The 2025 Income Tax Bill also eliminated the option for NIL TDS certificates; NRIs can now apply only for lower TDS certificates, potentially leading to upfront tax deductions even when no tax liability exists. Furthermore, the Tax Collected at Source (TCS) threshold on foreign remittances under the Liberalised Remittance Scheme has increased from ₹7 lakh to ₹10 lakh, easing the tax burden on higher remittances. These reforms aim to enhance tax compliance and bring clarity to NRI taxation.
How much money can be sent as a gift abroad from India?
Under India's Liberalised Remittance Scheme (LRS), resident individuals can gift up to USD 250,000 per financial year to non-residents, including NRIs, without prior approval from the Reserve Bank of India. This limit encompasses all permissible current and capital account transactions, such as gifts, donations, and maintenance of relatives abroad. However, as of April 1, 2025, remittances exceeding ₹10 lakh in a financial year are subject to a 20% Tax Collected at Source (TCS), applicable to the amount exceeding the threshold. Additionally, if the gift involves proceeds from the sale of overseas investments, the funds must be repatriated to India within 180 days before being gifted.