GIFT TO NRI  IS TAXABLE IN INDIA NOW ONWARDS

GIFT TO NRI IS TAXABLE IN INDIA NOW ONWARDS


Amendment in Section 9 of Income Tax Act, 1961

As per existing provision of section 9 of income tax act, in case of Non resident Income earned outside India or received outside India is not taxable in the hands of non-residents. Non-residents are taxable in respect of income earned in India or deemed to be earned in India or received in India or deemed to be received in India only under section 9 of the Income Tax Act, 1961, (“the Act”).


Gifts were made by residents in India to non residents upon which non resident claimed that those gifts were not taxable under the Act as that income neither accrued nor arose in India.  India wherein those gifts were claimed to be non-taxable in India as the gifted income did not accrue or arise in India. Those gifts comprised of payment of money and /or transfer of  property situated in India.

Section 56(2)(x) of the Income-tax Act provides i.e. if any sum of money was  paid or property (whether immovable or movable) was transferred by any person without consideration or for inadequate consideration in excess of Rupees 50,000 ,it shall be taxable in the hands of  recipient under the head ‘’ Income from other sources” .

However, the exemption provided under section 56 of specified person or specified occasion shall continue to apply to gifts to non-residents even in such cases. In other words, no tax shall be levied if property or sum of money is received by person outside India from a relative resident in India or on the occasion of his marriage.

New clause insert  in section 9 of Income Tax Act 1961  provide that if any sum of money paid or any property situated in India transferred by the person resident in India to the person outside India shall be deemed to accrue or arise in India or deemed to receive in India  and it shall be taxable in the  hands of non-resident  (NRI). On or after 5th July 2019.


In a treaty situation, the relevant article of applicable DTAA shall continue to apply for such gifts as well.
Location: Delhi, India

Comments

  1. UnknownJuly 18, 2019 at 8:10 PM

    Seems that the Government is on toes now. very nicely written. thanks for sharing

    ReplyDelete
  2. CA Updates by CA. Pooja Shukla RYPSJuly 19, 2019 at 12:00 AM

    thanks to everyone for supporting me

    ReplyDelete

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