NRI gifts, both directions, Section 56 and FEMA.

Section 56(2)(x) of Income Tax Act taxes gifts (money / property / specified movable property) received by an individual above INR 50,000 aggregate in FY as 'Income from Other Sources' at slab rate. EXCEPT gifts from 'relatives' as defined.

'Relative' under Explanation to Section 56(2)(x) for an individual:

• Spouse
• Brother or sister (own)
• Brother or sister of spouse
• Brother or sister of either parent
• Any lineal ascendant or descendant (parents, grandparents, children, grandchildren)
• Any lineal ascendant or descendant of spouse (in-laws)
• Spouse of any of the above persons

Standard NRI scenarios:

• NRI son gifts to Indian parent — parent is 'relative', fully exempt.
• Indian parent gifts to NRI daughter — daughter's parent is 'relative', fully exempt.
• NRI sibling gift / inheritance — sibling is 'relative', fully exempt.
• NRI uncle / aunt / cousin / niece / nephew — uncle / aunt via blood (parent's sibling) is 'relative'; via marriage is NOT; cousin / niece / nephew is NOT 'relative'; taxable above INR 50K.
• NRI friend gift — NOT 'relative'; taxable above INR 50K.

See our comprehensive Section 56(2)(x) guide.

• NRI remits money to Indian relative: foreign-source inflow. Credited to recipient's NRE / regular savings / NRO account depending on recipient's status.
• For Indian resident recipient: cash gift credited to regular savings account. No FEMA restriction on receipt by resident Indian. Form A2 + supporting documentation (gift deed / affidavit) completed at AD bank.
• Gift deed recommended: notarised gift deed from NRI donor to Indian recipient describing: donor's details + recipient details + amount + relationship + stamp duty on gift deed (varies by state, typically INR 500-5,000 for cash gift documentation).
• For gifts above INR 2 lakh to resident Indian in cash: Section 269ST violation if cash; strongly prefer bank transfer. NRI gifting via wire = compliant.
• Multiple remittances in a year: aggregate matters. Standard practice: gift via one or two consolidated remittances with clear gift deed documentation.
• Immovable property gift from NRI to resident: via registered gift deed in India + stamp duty + registration. FEMA permits (gift of property to resident family member allowed).

• Indian relative gifts money to NRI: outbound remittance from India. Governed by FEMA Current Account Rules + LRS (Liberalised Remittance Scheme).
• LRS limit: USD 2,50,000 per Indian resident per FY. Covers all permitted current + capital account transactions.
• LRS use for gift to NRI relative: specifically permitted under FEMA Master Direction on LRS — included in 'maintenance of close relatives abroad' + 'gift' as permitted purposes.
• Documentation: Form A2 declaration + PAN + purpose code (CRG - current remittance for gift). Gift deed strengthens case.
• TCS under Section 206C(1G): 20% TCS on LRS remittance above INR 7 lakh in FY (post Finance Act 2024). See our TCS LRS guide. Collected by remitting bank, creditable against Indian donor's income tax.
• Immovable property gift from resident to NRI: Indian resident can gift immovable property (not agricultural land) to NRI relative via registered gift deed + stamp duty.
• Shares / securities gift: resident can gift Indian securities to NRI relative via FC-TRS filing (shares transferred to NRI's NRO/NRE demat).

• Written gift deed: for all material gifts, not just immovable property. Notarised at least; registered if immovable property.
• Content: donor name + address, recipient name + address, nature of gift (money / property / securities), amount or description, date, acceptance by recipient, witness signatures, consideration clause (voluntary / without consideration), relationship statement (critical for Section 56(2)(x) relative exemption).
• Bank route: wire transfer / NEFT / RTGS / SWIFT. No cash for gifts above INR 2 lakh (Section 269ST).
• Form 15CA + 15CB: for remittance out of India above INR 5 lakh in FY (though for gift from Indian relative to NRI, often not required because gift is not 'chargeable to tax' under Section 195 - but AD bank practice varies).
• ITR disclosure: both donor and recipient should disclose material gifts in their respective ITR (Schedule EI for exempt gifts; Schedule OS if taxable).
• 5-year retention: all documentation preserved for 5+ years to support tax position if questioned.

Last updated: 2026-10-15.