Gifting money to your child in the US: what you should know

I want to utilize my LRS limits to gift money to my daughter in the US. What are the tax and reporting implications I should be aware of?

- Rohit Jain and Keshav Singhania

From India’s income tax perspective, a gift from a parent to a child is not taxable in the hands of the recipient, as children fall within the definition of “relative” for the purposes of section 56(2)(x) of the Income-tax Act, 1961, and the corresponding provision under the new income tax law, as applicable. That said, the source of funds should be properly documented and the remittance should be made through banking channels in compliance with the LRS requirements. Such a remittance will also be subject to tax collected at source @ 20% on the amount in excess of Rs 10 Lakhs in a financial year.