Tax on nri money transfer

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IRFAN ALAM (Querist)
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27 April 2016 Dear sir,

I am a senior citizen having PAN no. But not filing return earlier as I am not a tax payer.

I am receiving amount( 6 lacks per year ) from my NRI friends in USA between 2009 to 2016.
on behalf of my neighbours which I am paying to him either by cheque/cash as and when ask by him. For there help and medical and marriage support .I am having some quarries as follows..

1. The amount is taxable Rs. 6 lacks per years and if yes then how much.
2. The amount of intrest is taxable over 6 lacks
3. Income tax return is necessary .
4. Any government black money quarries will come under this transaction.
5. My sons income is coming under this issue.
kindly give me you valuable advice and solution for transfer money from USA and my USA friend are not available in India.

Thanks and regards
Irfan alam

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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27 April 2016 1 Amount received in excess of Rs 50,000 is taxable.
2 Yes the interest is taxable over 6 lacs,
3 Income tax return is necessary.
4 If no return is filed and tax is paid such query will come.
5 Your sons income will be treated as gift and no tax payable on it.
6 The amount received is from NRI only not from any foreigner.

IRFAN ALAM

IRFAN ALAM (Querist)
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27 April 2016 thnaks sir for your valuable reply . what is the safe solution for receiving money frim USA.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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26 July 2025 Dear Mr. Irfan Alam,

Thank you for your detailed query. Based on the scenario you've described, here's a clear breakdown of the taxation and compliance rules concerning money received from NRIs in the USA, especially in your case as a senior citizen and non-taxpayer till now.

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### 📌 1. **Is the ₹6 lakhs per year taxable?**

It **depends on the nature of the money** received.

#### ✅ **If it is a gift:**

* As per **Indian Income Tax Act (Section 56(2)(x))**, **gifts exceeding ₹50,000 in a financial year are taxable** as “Income from Other Sources”.
* **Exception**: Gifts from **relatives** (as defined in law) are not taxable.
NRI friends **are not considered relatives**. So:

* **Yes**, ₹6 lakhs/year from friends is taxable.
* You must include it in your total income and pay tax according to the applicable slab.

#### ✅ **If it is reimbursement or help for others (as claimed):**

* If you're just acting as a **conduit (pass-through)** and not retaining the funds for yourself, and there's **proper documentation**, then:

* You may **not be liable to pay tax**, but **proof of transactions, bank statements, and purpose** should be documented.
* However, tax authorities might treat it as income **unless there's clear evidence** that it's not for your benefit.

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### 📌 2. **Is the interest earned on this amount taxable?**

Yes. If you deposit this amount in a **bank account and earn interest**, **that interest is taxable** in your hands, irrespective of whether the original amount was taxable or not.

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### 📌 3. **Is filing an Income Tax Return necessary?**

Yes. Since your **total income (including gifts)** exceeds the basic exemption limit (currently ₹3 lakh for senior citizens), **you must file an ITR**.

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### 📌 4. **Could this raise black money or other compliance issues?**

Potentially **yes**, if:

* You do **not file returns**, and
* The money is not **properly explained** or **documented**.

In that case, the transaction may attract scrutiny under the **Black Money Act** or **Benami Transactions Act**, especially if you make cash payments on others’ behalf.

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### 📌 5. **Does this affect your son's income?**

Only if the money is **received in his account** or gifted to him.

* If not, and you are the one receiving and using it, **his income is not affected**.

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### ✅ Safe Solution for Receiving Money from the USA:

To avoid any legal or tax issues:

1. **Use legal banking channels only** (like wire transfer, SWIFT, etc.).
2. **Maintain full records**:

* Bank statements
* Communication with NRI friends
* Purpose and beneficiaries of the amount
* Cheque copies/payment proofs to others
3. Ask your NRI friends to send the amount with a **clear purpose** mentioned (e.g., "For medical help to XYZ via Mr. Irfan Alam").
4. **File Income Tax Returns** annually, disclosing these receipts and any interest earned.
5. If this is **frequent or large**, consider a formal agreement or obtain advice from a CA.

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### 📌 Additional Suggestions:

* Consult a **Chartered Accountant (CA)** to prepare and file your returns accurately.
* Avoid receiving large amounts in **cash** to prevent complications.
* For future receipts, ask your NRI friends to **directly transfer money to the beneficiary**, not through you.

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Would you like a sample **declaration letter** or **template for financial records** to help document these transactions?

Let me know—I'm happy to assist.

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