Cash above `50,000 gifted to pal is taxable


What are the tax liabilities for folks leaving India for good when it comes to revenue earned in India within the yr of departure? Will this revenue be taxed in India itself, or within the different nation?

—W. Sahay

An individual who is just not domiciled in India is required to file an endeavor in Kind 30A with the Indian income authorities and procure a no-objection certificates earlier than her departure from the nation. An individual domiciled in India is required to file an endeavor in Kind 30C, her Everlasting Account Quantity, objective of go to and estimated interval of keep exterior India, earlier than departure from India.

India doesn’t have an exit tax or expatriation tax as such. An individual leaving the nation for good is liable to pay tax in India on India-sourced revenue or revenue topic to tax in India attributable to her residential standing.

I plan to reward my pal some cash. Will both of us be taxed on the quantity? I’m a non-resident Indian (NRI) and my pal stays in New Delhi.


There isn’t a reward tax as such in India. Nonetheless, revenue tax is levied on the recipient for any sum of cash acquired by that particular person in India with out consideration (i.e., and not using a quid professional quo) if the financial worth of the reward exceeds 50,000, besides in a case whereby such reward is acquired from a relative. The definition of the time period “relative” beneath the Earnings-tax Act, 1961, consists of numerous members of the family however doesn’t lengthen to a pal.

Subsequently, on this transaction, your pal must pay tax in India on receipt of the cash, if the quantity gifted exceeds 50,000. Tax must be paid on your entire gifted quantity as soon as it exceeds the exemption restrict. If the quantity is lesser than 50,000, the recipient is just not taxed.

Do I pay tax on my revenue earned in India although I’m an NRI? Does the kind of account I obtain revenue in have an effect on how my revenue is taxed as an NRI?

—Jagjit Chadha

Sure, you can be liable to pay tax in India on revenue being earned in India. The kind of account wherein the revenue is acquired is not going to affect the best way wherein this revenue is taxed. There are, nonetheless, particular exemptions on curiosity acquired on particular kind of accounts. For instance, curiosity revenue on non-resident account and overseas forex non-resident account.

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