Tax on NRI Money transfer to friend in India

No tax have to pay but treat it as a loan.

Dear Saroj

If you are transferring the money as Gift to your friend then your friend shall face Tax implication. In such case rate of tax can be anything roughly between 8 to 30% depending on your friend's other Income and Investments. 

In case, you transfer it as a Loan then there shall not be any tax implication however FEMA regulates such types of transaction. There are prohibition on period of loan, Interest rate, repatriation and use of such loan funds. 

Kindly obtain legal advice on the implication of FEM (Borrowing and Lending in Rupees) Regulation 2000.

Regards

Juzer

Hi Juzer

Thanks a lot for your kind reply.

I have another follow up question for you:

Do I need to have any kind of documentary evidence to back this claim?

And, what would happen if my friend transfer some of this amount to another person's account? How much of tax would another person need to pay for this?

Thanks again,

Saroj

Dear Saroj

Pleasure.

You may produce simple Loan Agreement incorporating all the requirement of FEMA Regulation or if you wish to give gift, a simple gift letter will do.

If your friend wish to transfer this money to other person then again we have to name the transaction of transfer which can be named as gift,loan etc.

Regards

Juzer

In case, you transfer it as a Loan then there shall not be any tax implication however FEMA regulates such types of transaction. and please consult an advisor or take help of an online advisor.