What are the rules relating to taxability of gifts? Please let me know the maximum cash amount which a father can gift to his married/unmarried daughters and grandchildren, within a year.

Vijendra Aggarwal

As per the Indian tax laws, gifts (money or its equivalent) received from specified relatives are not taxable, irrespective of the purpose or occasion. For this purpose, relatives mean spouse, brother, sister, spouse’s brother, spouse’s sister, parents’ brother or sister, individual’s lineal ascendant or descendant, any lineal ascendant or descendant of spouse and the spouse of all these persons. Even in the case of gifts received from others, the regulations lay down specific instances where they would not be taxable.

In your case, the gift would be from a specified relative (father to daughter or grandfather to grandchildren) and hence there would not be any threshold limit or tax implications for such gifts.

I recently started investing in ICICI Prudential US Bluechip Equity Fund, which invests directly in US Stocks; Franklin India Feeder US Opportunities Fund and JPMorgan Europe Dynamic Offshore Fund, both of which are feeder funds. All these funds are registered in India with SEBI and I am also liable to pay capital gains tax in India.

I am a resident Indian citizen. I am KYC compliant and my PAN is linked with these funds. Are investments in these funds regarded as foreign assets? Should I disclose to the Income-Tax department about my investments in these funds or any fund which invests in foreign equity specifically? What about funds that invest in foreign equity less than 35 per cent?

Siva Sankar

We understand that you have invested in mutual funds that are registered in India and any capital gains on the sale of such funds are subject to taxation in India.

We also understand that these mutual funds would in turn invest the money overseas on their own accord and you would not be a privy to this transaction. Based on the above, the investment made by you should not qualify as a foreign asset for income tax purposes and, accordingly, there should be no requirement of disclosing the same in the tax return.

However, please note that there are no available guidelines on this aspect at present and a formal clarification from the tax authorities could help clear any ambiguity in this regard.

The writer is Partner, Deloitte, Haskins and Sells, LLP. Send your queries to taxtalk@thehindu.co.in

Related Topics