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An expert’s response to a senior citizen’s query on whether their daughter’s quarterly remits from the US will be taxed in India raises awareness about the scenario.
Is money sent by foreign relatives taxed in India? (Photo Source: Freepik)
Many Indian citizens have a family member living and working abroad. They send them the regular money earned in foreign currency. Here’s decoding whether this income is taxed by the government of India under the Income Tax Act and has to be mentioned in the recipient’s ITR return?
Moneycontrol’s Ask Wallet-wise initiative revealed the answer to the pertinent question. A financial expert’s response to a senior citizen, who has a daughter working in the United States of America and remits money at regular intervals to the retired individual and his homemaker wife, provided a timely understanding of such income and how it is treated by the income tax authorities.
In their question, this Indian man asked, “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.”
In their response, the Moneycontrol expert highlighted the abolition of donor-based gift tax, stating that such remits are treated as gifts and “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 expert added. “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 specified relatives are fully tax-exempt under the Income Tax Act. The exempted relatives include the children of Indian citizens under Section 56(2)(x). Consequently, the Rs 1,25,000 remitted by the daughter every three months into her mother’s bank account is not officially marked as income and is fully exempt from tax.
Since the amount is not taxable, the senior citizen’s wife doesn’t have to declare it in her Income Tax Return. The daughter living in the US also need not disclose the same amount in her ITR if she happens to file it in India. “Under Section 139, an individual must file an ITR if their income before deductions and exemptions exceeds the basic exemption limit,” the expert stressed. “In the old tax regime, the limit was 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.”
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
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