Tax on the gift in foreign currency from elder brother

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 February 2011 Hi,

My elder brother who is a US citizen wants to give a gift to me in the form of US dollars(Foreign currency) during his visit to our place in India.

1) What is the maximum limit of gift in foreign currency that he can give ?
2) Once I receive the gift, do I need to pay any gift tax ?
3) How do I maintain the proof of gift tax for future reference?

Thanks in advance,
Sandeep

Ravikant

Ravikant (Expert)
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22 February 2011 There is no Gift Tax.
Gifts from relatives are exempt.

Querist : Anonymous

Querist : Anonymous (Querist)

22 February 2011 If my brother gives me dollars in cash then what documentation should I maintain to show the proof of gift.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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22 February 2011 You should not accept dollars from him and request him to gift in Indian Rupees so that you can spend the money.

Otherwise tell him to remit the amount from US as and when he goes there and take gift from banking channels.

If you think that he will forget the things, tell him to give a cheque from his NRE or NRO A/c if there be any.

As per my information you can still take US $ 2000.

Querist : Anonymous

Querist : Anonymous (Querist)

23 February 2011 Hello Mr Paras,
Thanks for your response. Is the limit of $2000 applicable per financial year or it is only once in lifetime ?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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26 July 2025 Here’s a clear summary based on your query:

### 1) Maximum limit for gift in foreign currency from elder brother (a US citizen) to you in India:

* **Under FEMA (Foreign Exchange Management Act) rules**, an individual can **receive foreign currency as a gift up to USD 2,000 per financial year without routing it through banking channels**.
* For amounts **above USD 2,000**, it should be received via proper banking channels (wire transfer, cheque, etc.) through your **NRE/NRO/foreign currency account** to comply with RBI regulations.
* There is **no lifetime limit**, but the USD 2,000 limit is per financial year (April to March).

### 2) Tax on Gift:

* **No gift tax** exists in India as of now.
* Gifts from **relatives (including brothers)** are **fully exempt from income tax**, regardless of amount.
* So, even if your brother gifts you in foreign currency, you **do not need to pay any tax on the gift**.

### 3) Proof of gift for future reference:

* Ideally, get a **gift deed or letter of gift** from your brother mentioning:

* Amount gifted
* Date
* Relationship (brother)
* Purpose (gift)
* Maintain bank statements showing the receipt of money (if received via banking channels).
* If received in cash (less than USD 2,000), keep a **written acknowledgment or letter** stating the amount gifted.
* This documentation will be useful to prove the source of funds and relationship in case of any scrutiny by Income Tax or RBI.

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**Additional advice:**

* It's best to receive gifts via banking channels to maintain a clear audit trail.
* Avoid accepting large amounts in cash as it may raise compliance issues.

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