Can NRIs Gift Money to Relatives in India?

When a Non-Resident Indian (NRI) wants to gift money to relatives in India, understanding the regulations, tax implications, and the role of financial tools like term insurance and life insurance is essential.

Read more
Get ₹1 Cr. Life Cover at just
Term banner NRI
Video Medical Test+
Worldwide Coverage
Hassle Free Process

#All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply

₹2 Crore life cover at
Online discount upto 10%# Guaranteed Claim Support
Video Medical Test+
Worldwide Coverage
Hassle Free Process
+91
View plans
Please wait. We Are Processing..
Get Updates on WhatsApp
By clicking on "View plans" you agree to our Privacy Policy and Terms of use
We are rated~
rating
7.7 Crore
Registered Consumer
50
Insurance Partners
4.2 Crore
Policies Sold
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

Gifting is a popular way for NRIs to support their family members, celebrate special occasions, or show appreciation. However, knowing the rules governing these transactions can ensure compliance with Indian laws while protecting financial stability.

Understanding the Rules, Tax Implications, and Role of Term and Life Insurance

one crore term plan
plus

Term Plans

₹1
Crore

Life Cover

@ Starting from ₹ 16/day+

₹50
LAKH

Life Cover

@ Starting from ₹ 8/day+

₹75
LAKH

Life Cover

@ Starting from ₹ 12/day+

Is it Legal for NRIs to Gift Money to Relatives in India?

Yes, NRIs can legally gift money to their relatives in India. The Indian government permits NRIs to send funds to family members under certain guidelines to ensure transparency. These gifts can include cash, property, shares, or any other assets and are often exchanged to support financial goals or to help relatives with expenses. Additionally, using financial protections like term insurance or life insurance can complement gifts, providing an added layer of financial security to loved ones in case of unforeseen events.

Who Qualifies as a "Relative" Under Indian Law?

According to the Indian Income Tax Act, a “relative” includes:

  • Parents

  • Spouse

  • Children

  • Siblings

  • Grandparents

  • Grandchildren

  • In-laws (mother, father, brother, and sister-in-law)

Gifts given to individuals who qualify as “relatives” are generally exempt from tax in India, offering significant financial flexibility. This benefit also aligns well with the protection term insurance for NRI or life insurance provides, as it allows NRIs to supplement their gifts with security for their loved ones’ future.

one crore term plan

Secure Your Family Future Today

₹1 CRORE

Term Plan Starting @

Get an online discount of upto 10%#

Compare 40+ plans from 15 Insurers

+Standard T&C Applied

How Much Money Can an NRI Gift?

There is no upper limit on how much an NRI can gift to a relative in India. However, the funds must comply with Indian tax regulations to avoid additional tax liabilities. Transfers should be made through proper banking channels, ensuring that the transaction is documented and transparent. Using a Foreign Inward Remittance Certificate (FIRC) can help confirm that the transaction is a legal inward remittance. To further secure these gifts, term insurance or life insurance policies may be beneficial as they offer financial protection to family members.

Tax Implications for the Recipient in India

In India, gifts received from a relative are generally exempt from income tax. However, if the recipient is not a relative (as defined under the Income Tax Act), the gifted amount is taxable if it exceeds ₹50,000. This rule helps avoid misuse of tax exemptions by defining “relative” relationships. NRIs can also consider term insurance or life insurance policies for family members, ensuring ongoing financial support that complements these tax-exempt gifts.

Life Insurer Piller

Methods for NRIs to Transfer Gifts to Relatives in India

NRIs have various options to transfer funds or assets as gifts:

  • Bank Transfer: This is the simplest and most direct method, where NRIs can transfer funds directly to a family member's Indian bank account. Using an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account allows secure and compliant transactions.

  • Cheque/Demand Draft: Another popular method, NRIs can send a cheque or demand draft to family members in India.

  • Money Transfer Services: Several financial institutions and banks offer international money transfer services, which can be used to transfer funds safely and efficiently.

When transferring large sums, NRIs might also consider the benefits of having term insurance or life insurance policies as an additional layer of financial protection for the family.

Gifting Property or Assets

In addition to cash, NRIs can also gift immovable property or other assets to relatives in India. When gifting property, NRIs should follow specific protocols:

  • Execute a gift deed, registering it with the local sub-registrar’s office.

  • Pay the applicable stamp duty, as required by state law, to ensure compliance.

  • Ensure both parties sign the deed, which is essential for legal documentation.

NRIs can also use life insurance as a complementary asset, which can provide security and financial stability in addition to physical assets gifted to loved ones.

Important Considerations for NRI Gifts

  • Documentation: Maintain a record of the transaction, such as bank statements, FIRC, and other relevant documents, to avoid legal or tax complications.

  • Exchange Rate Impact: When gifting cash, be mindful of currency exchange rates, which could affect the value of the gift received in INR.

  • Consult a Tax Advisor: As tax laws can be complex, especially for NRIs, consulting with a tax advisor is recommended to ensure compliance and make the most of available tax exemptions. Additionally, consulting an insurance advisor on term and life insurance options can help secure long-term protection for loved ones.

Conclusion

Gifting money or assets is a meaningful way for NRIs to support their loved ones in India. While the process is relatively straightforward, NRIs should be aware of the rules, tax implications, and the benefits of using term insurance and life insurance to protect their families further. Gifts to relatives enjoy tax benefits under Indian law, making it a practical option for NRIs who wish to contribute to their family’s financial well-being. Consulting with both tax and insurance advisors can ensure smooth transactions and provide financial security across borders, keeping families connected and financially protected.

FAQs

  • Q: Is there any tax on gifts from NRIs to relatives in India?

    Ans: Gifts from an NRI to a "relative" in India are generally tax-exempt, but it's essential to adhere to tax regulations for non-relatives.
  • Q: Can NRIs gift property in India?

    Ans: Yes, NRIs can gift immovable property to relatives in India, but the process must follow legal protocols, including a registered gift deed and applicable stamp duty.
  • Q: Is there a limit on how much NRIs can gift?

    Ans: There's no limit on the gift amount, but proper documentation and compliance with tax regulations are crucial.
  • Q: How can term insurance or life insurance benefit NRI families?

    Ans: Term insurance and life insurance offer financial security for family members, ensuring that loved ones have a stable income in case of the policyholder’s passing. For NRIs gifting funds, having term insurance or life insurance complements financial support by providing long-term stability.
Policybazaar is
Certified platinum Partner for
Insurer
Claim Settled
98.7%
99.4%
98.5%
99.23%
98.2%
99.3%
98.82%
96.9%
98.08%
99.37%
Premium By Age

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

Choose Term Insurance Plan as per you need

Plans starting from @ ₹473/Month*
Term Insurance
1 Crore Term Insurance
Term Insurance
2 Crore Term Insurance
Term Insurance
4 Crore Term Insurance
Term Insurance
5 Crore Term Insurance
Term Insurance
6 Crore Term Insurance
Term Insurance
7 Crore Term Insurance
Term Insurance
7.5 Crore Term Insurance
Term Insurance
8 Crore Term Insurance
Term Insurance
9 Crore Term Insurance
Term Insurance
15 Crore Term Insurance
Term Insurance
20 Crore Term Insurance
Term Insurance
25 Crore Term Insurance
Term Insurance
30 Crore Term Insurance
Term Insurance
15 Lakh Term Insurance
Term Insurance
60 Lakh Term Insurance

Life Insurance Articles

  • Recent Article
  • Popular Articles
24 Apr 2024

Most Common Life Insurance Frauds in India

Life insurance fraud is a financial crime that can be committed

Read more
09 Aug 2023

What High Net Worth Individuals (HNIs) Do To...

High net worth individuals often opt for life insurance plans to

Read more
28 Jun 2023

A Review Of ICICI Prudential Life Insurance

“Policy Bazaar insurance clarified the term policy for me, so

Read more
27 Jun 2023

A Review Of HDFC Life Insurance

“I recently bought an HDFC term plan and it is the best

Read more
20 Jun 2023

Life Insurance Policy in India with High Returns

The life insurance policy in India is a type of life insurance

Read more

Life Insurance for NRI

Going beyond geographical boundaries to study or pursue a career abroad is a common aspiration for many

Read more

Life Insurance Plans in Canada for NRIs

For NRIs living in Canada, various Indian insurance companies offer their protection plans and cash value life

Read more

Can NRI buy Life Insurance in India?

Life insurance is essential for securing your family's future, whether you're living in India or abroad. It pays a

Read more
Need Help? Request Callback
top
View Plans
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL