Gifts from Overseas
It is quite normal for persons to receive gifts from their relatives from outside India. For many it’s a crucial source of funds to meet their needs – living, education or otherwise.
Are you one of those who has received or may receive such a gift? While gifts are most welcome, there are aspects which require serious attention. Such as Foreign Contribution Regulation Act, 2010 (“FCRA”) applies to citizens of India outside India!
Read on for a summary overview…..
FCRA
- If the Relative is citizen of a foreign country, such gift though a “foreign contribution” does not require prior permission; and
- And if such gift is in excess of Rs 10 lakh* (Rs 1 million) in a financial year (period April-March), the recipient is required to inform by filing online Form FC-1 within 3 months* from date of receipt.
- The above applies even if the gift is in Rupees.
Note that an article for personal use whose market value in India on the date of gifting is in excess of Rs 1 lakh (Rs 100,000) is also considered “foreign contribution”
*Threshold limit of Rs 10 lakh (earlier Rs 100,000) and 3-month timeline (earlier 30 days) is amended vide Notification dated 1st July 2022.
Income Tax Act, 1961 (“ITAct”)
- Gift received from Relative is not income liable to tax in India
- However, note carefully that a relative as defined under FCRA may not necessarily be considered a relative in the definition under ITAct.
- It is only gift from relative as defined under the ITAct which is so exempt
Your Thoughts, Comments, Observations, Inputs are deeply appreciated.
Rajesh Lal
Chartered Accountant
☎: +91-9971033977
✉: rajeshlal@rajeshlalandco.com
LinkedIn: https://in.linkedin.com/in/rajesh-lal
