: Remittance of money from father who is an Indian to his son who is an Indian holding PR of America My uncle, lives in India, wants to remit money to his son who is an Indian holding PR of America. His son wants to purchase

Vote Up Vote Down   0 Reactions

Login to give Reaction!

What is the procedure my uncle needs to follow in India?

From India Tax Point of view, a parent can Gift his son unlimited amount of money. There is no tax due to this in India for your uncle or his son. Transferring the funds out of India is also possible.

Under the Liberalized Remittance Scheme by RBI, one can transfer upto 200,000 USD. Please check with your Bank for the exact paperwork. A form 15CA and 15CB [by CA] are required to establish taxes have been paid.

Vote Up Vote Down   0 Reactions

Login to give Reaction!

What procedure my cousin needs to do in America?

There is no US income tax due from the recipient of a gift; it is not part of the recipient's taxable income. Nor does the US impose a gift tax on the recipient of a gift; gift tax, if any, is due from the donor. But, since the money is coming to the US from abroad and is likely to be on the order of tens of thousands of dollars (downpayment for a house), it is best if the son asks his father to create a paper trail by sending a letter to the effect that out of love and affection for his son and the goodness of his heart, Daddy wants to give Sonny Boy a gift of $X, and the son should write a letter to his father acknowledging receipt of the gift (thanks are optional!). Both parties should keep this correspondence in a safe place just in case the IRS or the US Treasury Department or the Drug Enforcement Administration or Homeland Security come calling about the $X, where it came from, and why. Certainly, the bank issuing the mortgage on the property will want copies of bank statements for the previous three or six months, and will want explanations of where the $X came from and whether it truly is a gift or a loan that will need to be paid back at a later date.