What is a Gift by NRI to Resident Indian under FEMA Act?
If you live abroad as an NRI or OCI and you send money, property, or other assets to someone in India without expecting anything in return, FEMA treats it as an NRI gift and regulates how that transfer can happen. Even family support can be treated as a “gift” under Indian law. The rules mainly affect the resident receiving the gift, not the NRI sending the gift.
Key FEMA Rules for Gift by NRI to Resident Indian:
- FEMA regulates how and through which channels an NRI or OCI can gift money or assets to a resident Indian.
- NRI gifts must be sent through permitted routes, such as NRE/NRO accounts or direct foreign bank remittances.
- FEMA allows gifts of money, shares, and residential or commercial property acquired in compliance with its rules.
- Large cash gifts and restricted properties like agricultural land or farmhouses are generally not permitted.
- Proper authorisation and documentation are required, as FEMA focuses on compliance, not tax exemption.
Information About
Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund
Guaranteed Return Plans, Fixed Deposits &
Debt Mutual Fund
Guaranteed Return Plans
Returns Before Tax
6.9%* (TAX-FREE)
Fixed Deposits
Returns Before Tax
7% (TAXABLE)
Debt Mutual Fund
Returns Before Tax
8% (TAXABLE)
VIEW PLANS
*For annual premium upto ₹5 Lacs
Roles of FEMA and Income Tax Act in NRI Gifts to Resident Indians
The rules applicable to a gift from NRI to a family member residing in India are in two layers:
-
FEMA (Foreign Exchange Management Act):
Decides how you can send money or assets to India and through which route.
-
Income Tax Act:
Decides whether your family has to pay NRI gift tax on what they receive.
There is no separate NRI gift tax today. However, gifts are taxed under income tax rules if conditions are met.
For Example:
You send ₹12 lakh from the US to your father in India.
- FEMA checks the transfer route.
- Income-tax law checks the relationship.
No tax applies on a gift from NRI son to father, as they fall under the relative category.
What Is Treated as an NRI Gift?
An NRI gift refers to a voluntary act of giving, without expecting repayment or services in return.
-
Common NRI gifts include
- Money: Sent through NRE, NRO, or direct foreign remittance.
- Movable assets: Shares, mutual funds, bonds, jewellery, gold, artwork, antiques.
- Immovable property in India: Flats, houses, or commercial property legally owned by you.
-
What is NOT treated as taxable property
- Cars and personal-use items
- Household goods and normal consumer items
-
Restricted assets
- Agricultural land, plantation land, and farmhouses are tightly restricted for NRIs and generally cannot be freely gifted.
FEMA Rules for an NRI to Gift Legally from Abroad
The following are the legal channels to follow to send a gift from NRI son to father from abroad:
-
Allowed ways to gift money
- Transfer from your NRE account to a resident’s bank account
- Transfer from your NRO account (money already in India)
- Direct foreign inward remittance through banks
Note: A Power of Attorney holder cannot gift on your behalf unless clearly authorised by you.
-
Cash gifts and foreign currency
You may give cash while visiting India, but:
- A resident can keep only up to USD 2,000 in foreign currency notes
- Very large cash gifts in rupees can attract scrutiny
Tip: Use bank transfers whenever possible. Cash creates questions later.
-
Gifting property in India
- You can gift residential or commercial property if it was bought legally under FEMA rules.
- You generally cannot gift agricultural land or farmhouses.
- If the property is later sold and the owner becomes NRI, repatriation is usually limited to USD 1 million per year.
-
Gifting shares and securities
NRIs may gift shares or securities to residents, but:
- Sectoral limits must be respected
- Valuation rules apply, especially for unlisted shares
- Proper reporting is required
Income-Tax Rules for Gifts Received from an NRI
Tax is checked in the hands of the resident recipient, not the NRI sender.
-
No separate NRI gift tax, but Section 56 applies
- Gifts are taxed under Section 56(2)(x) as “Income from other sources”.
- This applies even if the donor lives outside India.
-
₹50,000 limit for non-relatives
- If total gifts from non-relatives are ₹50,000 or less in a year, no tax.
- Once it exceeds ₹50,000, the entire amount becomes taxable.
-
Gifts from relatives – no tax, no limit
Gifts from these relatives are fully exempt:
- Parents, grandparents, children, grandchildren
- Spouse
- Brothers and sisters (including spouse’s siblings)
- Lineal ascendants or descendants of spouse
Friends, cousins, and distant relatives usually do not qualify.
-
Special exemptions
- Marriage gifts – fully exempt, even from non-relatives
- Inheritance or will – always exempt
- Gifts from approved trusts or institutions – subject to conditions
-
Property gifts and valuation
- If you gift property to a non-relative, the stamp duty value becomes taxable
- Movable property like shares or jewellery is taxed if the value crosses ₹50,000.
Important change for returning NRIs (NOR)
From 1 April 2024, if you return to India and qualify as Not Ordinarily Resident (NOR):
- Monetary gifts above ₹50,000 from resident Indians may become taxable
- This mainly affects returning NRIs receiving large gifts from family in India.
What are the Documents Required?
You should carefully prepare your documents, as even exempted NRI gifts can be questioned if the documents are weak. Your family should keep the following documents ready:
- Your passport, OCI, or PAN
- Your overseas income proof
- Bank transfer records
- A proper gift deed
Without proof, tax officers may treat the amount as unexplained income.
Which Gift Deeds are Important?
The following gift deeds are essential to protect your family:
- For money gifts: simple stamped gift deed
- For property: a registered gift deed is mandatory
- Other documents: Attach bank proof and ID documents
Conclusion
Gifting from abroad is a gesture of care, but it is also a legal transaction. When FEMA rules, tax limits, and documentation are correctly handled, your support reaches your family smoothly. With the proper planning, your gift remains a blessing and not a future problem.
Invest 18k/month & get 2 Crore# Tax-Free*
Manage your funds online60k + happy customers across 25+ countries
Compare & Choose30+ Plans and 150+ Fund options
