How will funds repatriated to UK be taxed?

My son needs financial help to buy a house in the UK, where he has been living since 2011 and has since made only two short visits—each of three weeks duration—to the country. As an Indian citizen, how much money can I send him for purchasing the house without any tax liability to him? 

—Name withheld on request

 

Under the India Income-tax, the income tax is levied on any sum of money, movable property or immovable property received in excess of 50,000 by an individual without consideration (i.e., without a quid pro quo) or for inadequate consideration, except gifts received from a “relative” or on marriage or by way of inheritance or other specified exclusions. Relatives include spouse, siblings, in-laws, parents, any lineal ascendant or descendant of self or spouse, and others. 

 Assuming that the transfer of amount is by way of gift, gift received by son from his father is covered by exclusion provided and hence, will not be taxable in India in the hands of your son. However, the taxability of gift in the UK may need to be analysed separately. You may seek advice from a UK tax professional.

 

I borrowed 10 lakh from  my cousin, who deposited the amount in my bank account in India. What will be the charges and my tax liability for transferring the amount to Australia, where I stay. Is there any limit on the amount that I can transfer to Australia? 

—Name withheld on request 

 

Under the exchange control law, you may remit to a bank outside India up to 1 million per financial year from your Non Resident (Ordinary) (NRO) Account.   Assuming that this is a bona ide personal loan transaction between you and your cousin and the loan is repayable to your cousin within an agreed period of time, there will be no income-tax liability in your hands in India.

Sonu Iyer is tax partner and people advisory services leader, EY India.

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