Rules for Remittances Abroad - FEMA - Corporate Law

Facts of the case :- A mother who is a retired pensioner as well as the income tax payee, sells her property in Delhi and is liable to pay capital gains tax on the transaction in the current year 2009-10. She has purchased another residential house property of a lesser amount for which she is entitled to exemption under section 54. Balance Sale proceeds from the property sale is deposited in her savings account in Delhi. Her elder son is settled in U.K and holds the British Passport.

Queries :- 1) Can she remit the sale proceeds to her son in U.K as gift for meeting his family maintenance and living expenses, from her savings account?

2) If the answer to the above query is Yes, is there any limit for such remittances to be made in British Pounds?

3) Is TDS to be deducted on the remittances made and on what rate?

Under Sched 3/Rule 4 -Current acnt transaction in FEMA--

-Gift is limited to USD 5000 p.a.But gift(except some specified case) is subject to tax in the hand of receiver for which Resident need to pay only net of tax.

- Remittance for living expenses in this particular case is not allowed under FEMA.Hence matter of taxation not arieses.

A resident can remit for specified Current Account Transactions as per the limits prescribed under shed 2 & 3 of respective regulation.Under liberised scheme a Resident allowed to remit up to USD 2,00,000 p.a for any permitted CAPITA a/c transaction inclusive of all current A/c transaction as specified above.However a resident can remit beyond said prescribed limit if he hold a RFC A/c which need a prior aproval of RBI to open such A/c. So far the immovable property is concerned it can be inheritted by from Resident to NR & Vice Versa only production of legal heir certificate / will /othr such dox after death. respective circular is attached for ur reference (an amendment in royalty payment is not incorporated here in this pdf)