My daughter has been staying and dealing within the US on an H-1B visa for the previous two years. Does she qualify as a non-resident Indian (NRI)? Can she switch funds to me in India for assembly my bills? Are such funds taxable?
—Name withheld on request
The guidelines that decide the residential standing of an individual beneath the alternate management legislation are completely different from these beneath the revenue tax legislation. Under the revenue tax legislation, any “citizen of India” or “person of Indian origin” who lives exterior the nation and solely makes visits right here, will qualify as a non-resident in India beneath the next situations: Physical presence in India through the related monetary yr is lower than 182 days, and India-sourced revenue is lower than ₹15 lakh; bodily presence in India through the related monetary yr is lower than 120 days even when India-sourced revenue exceeds ₹15 lakh; and bodily presence in India through the related monetary yr is 120 days or extra however lower than 182 days and fewer than three hundred and sixty five days within the previous 4 monetary years, even when the India-sourced revenue exceeds ₹15 lakh.
However, beneath the alternate management legislation, when an individual leaves India for employment, for carrying on enterprise, or for every other goal indicating his/her intention to remain exterior India for an unsure interval, he/she could also be thought-about as a “individual resident exterior India”. Assuming your daughter is roofed beneath the above situations, she could qualify as an NRI beneath the alternate management legislation.
Further, your daughter could remit her earnings to you for assembly your bills in India. Under the revenue tax legislation, the place any sum of cash exceeding ₹50,000 is acquired by a person with out consideration from any individual, the identical is taxable within the fingers of the recipient particular person. However, presents from a relative should not liable to tax within the fingers of the recipient or within the fingers of the individual giving the reward. The time period ‘relative’ is outlined to incorporate partner, brother or sister, brother or sister of the partner, brother or sister of both of the mother and father, any lineal ascendant or descendant, any lineal ascendant or descendant of the partner, and others.
Accordingly, there’ll no revenue tax implications in India on switch of funds by your daughter to you for assembly your bills in India both for you or your daughter.
Sonu Iyer is tax accomplice and folks advisory companies chief, EY India.
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