Intererst free loans from nri son

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 February 2015 I am getting Interest free loans from my NRI son in USA through NEFT in my account. The loans will be repaid on his return to india after 4-5 years. I am depositing same in bank in fixed deposits in my name and paying income tax as per applicable slab. Kindly guide if there are any restrictions on such remittances under Foreign Exchange Regulations and/or Income Tax rules and also any formalities or documentation required legally. As my son and daughter in law both are in service in USA, can I borrow from both if there are any restrictions on individual borrowing.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 February 2015 You can borrow see the link for more details. Tax implications will not be there.
https://www.goodreturns.in/personal-finance/planning/2014/05/can-resident-indian-borrow-money-from-close-relative-abroad-269356.html

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Amol S Joglekar

Amol S Joglekar (Expert)
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08 February 2015 There is NO limit as such. You can borrow as much as you desire and as much as your son is capable of remitting.
The NEFT entries in your account are sufficient proofs. You need not keep anything else.
(Since the era is that of nuclear families, and it seems that the money involved in the querry is huge enough to concern YOU, you may opt for a letter from your son as well as daughter in law, confirming that they have given you INTEREST free loan, repayable as and when dim fit by them, respectively)

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Querist : Anonymous

Querist : Anonymous (Querist)

08 February 2015 Thanks a lot. If overall loan amount exceeds $2,50,000 then what will be the position. Whether this limit of $2,50,000 is applicable to borrower or lender. Can I borrow $2,50,000 from each of my son and daughter in law.

Amol S Joglekar

Amol S Joglekar (Expert)
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08 February 2015 So long as you are SURE of your of your SOURCE, you need not worry at all.

By quoting $, now you are shifting from NEFT to SWIFT?????????

When you say NEFT, it means the money has come from NRE account

Now you are switching over to USD.... please be frank in your query.

Querist : Anonymous

Querist : Anonymous (Querist)

08 February 2015 Thanks a lot. The money is remitted by NEFT only and not Swift. I am talking about the maximimum limit of $2,50,000 as mentioned under FEMA. The funds are remitted in my account by NEFT only remitted to me say $10,000 p.m. which is their monthly savings, directly from their Bank account in USA.

Amol S Joglekar

Amol S Joglekar (Expert)
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10 February 2015 So there are 2 parts to your query.
01. A. First is so far as transfer from NRE account to your savings/current account. Please note the difference between NEFT and SWIFT.
B.Secondly the NRE account can be maintained either in INR or FCNR

02. Probably you are asking about ECB (External Commercial Borrowing) So far as relatives (You are relative in both of your cases...son as well as daughter in law)are concerned, ECB provisions are covered under DIRECT entry. Hence there is no LIMIT per se.
Hope this answeres your query.

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Querist : Anonymous

Querist : Anonymous (Querist)

10 February 2015 Shri Amol S. Joglekar Thanks for interest in replying my querry. But I feel there is some confusion.I am an individual retired person not engaged in any business activity. I am simply getting direct remittance through NEFT from my son's account in USA (Out of his savings) and I deposit the same in my name in my banks fixed deposits and pay income tax on the interest income as per applicable slabs. I just wanted to know as to whether there is any limit on such interest free loans taken by me from my son or daughter in law or both keeping in view FEMA Regulations. ECB is something entirely different.

Querist : Anonymous

Querist : Anonymous (Querist)

10 February 2015 Shri Amol S. Joglekar Thanks for interest in replying my querry. But I feel there is some confusion.I am an individual retired person not engaged in any business activity. I am simply getting direct remittance through NEFT from my son's account in USA (Out of his savings) and I deposit the same in my name in my banks fixed deposits and pay income tax on the interest income as per applicable slabs. I just wanted to know as to whether there is any limit on such interest free loans taken by me from my son or daughter in law or both, keeping in view FEMA Regulations as I undewrstand that there is limit of equivalent of $2,50,000 in such case. If so whether this limit apllies to lender or borrower. If it applies to lender than whether I can borrow up to equivalent of $2,50,000 from each of them. ECB is something entirely different.

Amol S Joglekar

Amol S Joglekar (Expert)
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10 February 2015 The confusion seems to be "use of some words LOOSLEY"

See, In the first reply only I clarified that there is NO restriction in such borrowings. You can borrow as much as you can. To clarify further, FEMA provisions are not creating any hindrance in your case. Just ignore any limit of $250,000, since it is not applicable in your case.

(My curiosity is why you are using the word NEFT?)

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