Income tax on funds recieved from relative abroad

POSTED BY Ravi Nagar ON November 8, 2012 2:20 pm COMMENTS (4)

I have 2 situations for that I need to know about tax implications.

1. I live in India. I have purchased a property in India on my sister’s name who lives in abroad. She transfers money from her foreign bank account to my (or my father’s) saving account in India and I pay to the builder. Is there any income tax implication on me?

Though property is on her name. I have provided my address and contact details for the ease of communication. Is it right? Does it complicate things for me?

 

2.She occassionaly transfers small amounts of money into my account as a gift or to purchase something for her from India.Is there any income tax implication on me?

 

I really appriciate if you can help me understand this.

4 replies on this article “Income tax on funds recieved from relative abroad”

  1. Ravi Nagar says:

    Dear Ashal, Malhar’s answer cheared my doubts. Thanks for asking.

    -Ravi

  2. Dear Ravi, I do hope the things are clear to you now?

    thanks

    Ashal

  3. Here is a reply from Malhar Majumdar – https://www.facebook.com/malharmajumder . Thanks to him 🙂

    1 — As the property is in the name of your sister and you are acting as her representative in India, you may accept the money in your account without the amount getting added to your income. However you may keep bank records of receipt from sister and corresponding builder payments to avoid any complications.

    2 — You are not liable to pay any taxes on the same. Please read Clause 56 (vii) proviso (a) of the IT Act 1961, which says that if an individual receives a sum of money from a relative, which includes brother or sister of the individual, he is not liable to pay any taxes. I am considering this to be casual receipt and not because of any contractual obligation. Hence I am classifying this income as Income from Other Sources u/s Sec 156


    Malhar Majumdar from http://www.gliese.com

    1. Ravi Nagar says:

      Thanks a lot Manish & Malhar !

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