Know The Gift Tax Implications For NRIs: Useful
NRI Taxation: Understanding the Tax Implications of Gifts from Cousins
A couple resides and is employed in France. After hosting her cousin’s family during their recent trip to France, my wife’s cousin expressed a desire to show appreciation by sending her money through a wire transfer. Could this situation potentially affect my wife’s tax obligations in India?
The identity of the individual has been kept confidential at their request.
According to foreign exchange regulations, it is permissible for your wife’s cousin to transfer funds as a gift directly to your wife’s bank account located in France.
According to Indian tax law, there are specific relatives designated who are permitted to give or receive gifts without incurring any tax consequences. According to the established guidelines, a relative in connection to an individual encompasses a husband, wife, brother, sister, or any direct ancestor or descendant of that person.
It is important to highlight that, according to Indian tax law, the term ‘cousin’ does not qualify as a relative.
In a significant financial consideration, it is important to note that any gift surpassing ₹50,000 within a single financial year will incur tax liabilities under your wife’s name for the entire value of the gift. The income will fall under the category of Other Sources for taxation purposes. Furthermore, the agreement between India and France aimed at avoiding double taxation does not offer any exemption from this tax.
A tax consultant has mistakenly classified an individual as a resident in the filing of their tax return for the 2023-24 period. What course of action is available at this moment?
The individual has chosen to remain anonymous at their request.
It is essential to rectify your residential status in your income tax return. This adjustment is crucial for ensuring precise tax calculations and for safeguarding the tax benefits that non-residents are entitled to receive.
Residents looking to update their status can do so by submitting a revised return prior to the deadline of 31 December 2024.
For those who find themselves unable to submit the revised return by the specified deadline, there remain several options to address the situation effectively. In the event that an individual receives an intimation under Section 143(1), there are several options available for consideration. These include the possibility of submitting a rectification application, filing an appeal against the intimation, or making a request to the Central Board of Direct Taxes to submit a revised return, even if it is delayed, contingent upon the specific circumstances at hand.
In the event that adjusting your residential status leads to an increase in tax obligations, it is possible to submit a revised tax return following the payment of any additional taxes owed.
