Implications of daughter to mother inward foreign remittance

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agarwal

24 Points Joined January 2017

Implications of Daughter to Mother Inward Foreign Remittance

Hi all

I have an urgent query related Inward Foreign Remittance

We want to know law and tax implication both for Inward Foreign Remittance. Vitals of transactions are:
1. Money is sent from Daughter to Mother.
2. Daughter is a US citizen with OCI. She herself still has valid Pan Card and bank account in India.
3. Mother is Indian Citizen who also files a tax return every year
4. The amount of the transaction will be approx 10-15 lakh and will be transferred through online channels
5. The mother will buy Movable Asset like Jewellery from this money

We would like to know:

Is there any declaration required by the bank / government before transferring money?
Is there any limit on withdrawals or rules for receiver bank account
Is there any Tax implication on the person receiving the money?
Is there need of Gift Deed in this case?

Reply on any these questions will be lot of help. Thanks in Advance.

Replies (3)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

196938 Points Joined July 2016

1. No. (as per Indian laws or rules)

2. No, but advised to pay by cheque or banking channel (especially larger amount)

3. As you are in relations, no tax liability on either of you.

4. Advisable. (helps at the time of any query)

agarwal

24 Points Joined January 2017

Thanks a lot. It really helps.

Abhinav

397 Points Joined February 2011

Is there any declaration required by the bank / government before transferring money?

No declaration needed to Indian government. However, from a US tax law perspective, a reporting to IRS is reqd. if a gift exceeds USD 14,000 per year. I am not an expert on USA taxes so a CPA will help. You can bring this to the notice of your client.

Is there any limit on withdrawals or rules for receiver bank account

No limit.

Is there any Tax implication on the person receiving the money?

No tax implication on daughter as well as mother.

Is there need of Gift Deed in this case?

Not mandatory but definitely advised. In case mther's case is selected for scrutiny assessment, she will have gift deed to prove the flow of funds. Gift deed can be executed on plain paper. Since amount is large, I will even advise to register it if possible to avoid any future claim from daughter's side on that money though registration is not mandatory. Daughter should retain evidence of source of funds and tax payments. In a rare case, if source of funds is not properly explained, gift can be treated as unexplained credit u/s 68 & taxed u/s 115BBE.