Taking USD from India

She can get rupees converted to USD at RBI-authorized exchanges (like banks or authorized forex dealers) byshowing her passport and other required documents..

For tax rules in India regarding gifts:

Gifts received from relatives like a grandmother are exempt from tax in India under Section 56(2)(vii) of the INcome Tax Act. 

There is no tax implication in India for this gift. 

When taking USD out of India, if the amount is above USD 5,000, it needs to be declared on the currency declaration form.. For amounts above USD 10,000, there might be additional requirements. 

Yes, she can generally take the gift abroad, but the currency-export limit and source-of-funds documentation matter. Under FEMA, a person may take foreign currency notes/coins out of India up to US$3,000 (or equivalent); a larger amount should ordinarily be carried through authorised instruments such as a foreign-currency traveller’s cheque or bank draft, subject to the applicable rules. She may approach an RBI-authorised dealer/money changer, but should confirm what documents and payment method it accepts. A passport alone may not establish the source of the rupees; keep evidence of the grandmother’s gift and the rupee funds, and obtain the exchange receipt/encashment certificate. Do not split cash or misstate the purpose.

For income tax, a genuine gift from a grandmother is from a “relative” under section 56(2)(x), so the ₹7 lakh gift is generally not taxable in the daughter’s hands, regardless of the usual ₹50,000 threshold. Keep a signed gift declaration, proof of relationship, grandmother’s PAN/identity and source of funds, and evidence of transfer. If the grandmother is resident in India, gifting cash above ₹2 lakh is restricted under section 269ST; use a traceable banking channel rather than cash. The exact FEMA route can depend on whether the rupees are Indian cash or funds received through a bank and the amount she intends to carry as notes.

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