Gift Transactions for NRIs: A Practical Advisory
NRIs often exchange gifts with family and friends in India as part of routine financial and personal arrangements. While these transactions may appear straightforward, improper classification or inadequate documentation can lead to avoidable tax issues under Indian income tax law.
Being proactive and compliant at the time of gifting helps prevent future scrutiny.
How Gifts Are Taxed in India
- Gifts from Relatives
Gifts received from specified relatives are fully exempt from income tax, irrespective of the amount. - Gifts from Non-Relatives
Gifts received from non-relatives are taxable if the total value exceeds ₹50,000 during a financial year. - Gifts on the Occasion of Marriage
Marriage-related gifts are fully exempt, regardless of the donor or value.
Recommended Compliance Practices
- Document Every Gift Transaction
Gifts should always be routed through banking channels and supported by a properly executed gift deed.
Exchanging PAN details between the donor and recipient further strengthens compliance. - Maintain Clear Financial Records
Consistent and transparent documentation ensures a smoother audit trail and minimizes the risk of tax notices or follow-up queries. - Avoid Cash Gifts
Cash transactions are difficult to substantiate and may attract unnecessary scrutiny.
Digital transfers provide clarity, traceability, and protection.
Advisory Note
Gifts are a legitimate and accepted financial arrangement, but they must be structured correctly. NRIs are advised to treat gift transactions with the same discipline as any other financial activity—ensuring proper classification, documentation, and reporting.
NS Global Consultants Pte Ltd assists NRIs with end-to-end tax and compliance advisory, including gift structuring, documentation support, FEMA compliance, and Indian income tax filings—ensuring transactions are compliant, well-documented, and audit-ready.
1. Why Every NRI Should File a NIL Income-Tax Return in India
Many NRIs assume that if they do not earn income in India, there is no requirement to file an Indian income-tax return (ITR). While technically NRIs are taxed only on income earned or accrued in India, not filing a return—even with NIL income—can lead to avoidable compliance issues later.
Filing a NIL ITR is often a prudent compliance step rather than a legal formality.
Tax Position for NRIs
Under Indian income-tax law, NRIs are liable to tax only on income sourced in India. Foreign income remains outside the Indian tax net. However, the absence of taxable income does not always eliminate the need—or the benefit—of filing a return.
Why Filing a NIL ITR Makes Sense
Even when there is no taxable income, filing a NIL return offers several practical advantages:
- Establishes and documents your NRI residential status with the tax department
- Reduces the risk of automated tax notices, especially where there are significant NRE/NRO bank transactions
- Captures TDS credits, enabling refunds where tax has been deducted at source
- Creates a clean financial trail, which is critical for future repatriation of funds, property sales, or major investments in India
Advisory Insight
A NIL ITR functions much like an insurance policy—low effort, minimal cost, and long-term protection. It helps ensure continuity in compliance and avoids the burden of explanations or corrective filings in the future.
How We Help
NS Global Consultants Pte Ltd provides comprehensive NRI tax and compliance services, including:
- Filing of NIL and regular income-tax returns
- Review of NRE/NRO transactions and TDS credits
- Residential status evaluation
- Advisory support for repatriation, property transactions, and long-term tax planning
Our approach ensures that your Indian tax records remain accurate, compliant, and audit-ready—year after year
2. NRI & Indian Stock Market: Rules You Must Know
NRIs can invest in the Indian stock market—but only if the structure and compliance are done correctly. One mistake can trigger FEMA violations and tax issues.
How NRIs Invest in Indian Shares
1. The PIS Route (Mandatory)
NRIs must invest through the Portfolio Investment Scheme (PIS):
- Open a PIS account via an RBI-approved Authorized Dealer (AD) bank
- Every buy and sell is reported to the RBI through this route
- Ensures regulatory tracking and FEMA compliance
2. NRE vs NRO Trading Accounts
Choosing the right account determines repatriation eligibility:
- NRE PIS Account
- Fully repatriable
- Profits can be transferred abroad
- NRO PIS Account
- Non-repatriable
- Funds remain in India (subject to limited remittance rules)
Critical Rules NRIs Must Follow
- Maintain separate demat & trading accounts for NRE and NRO
- Do not use a resident demat account after becoming an NRI
- Ensure accurate reporting of all holdings for tax and compliance purposes
- All trades must route only through PIS-linked accounts
Even one trade executed through a resident account after NRI status can result in a FEMA breach.
How NS Global Consultants Pte Ltd Helps
We ensure end-to-end NRI investment compliance, including:
- PIS & account setup
- Broker & bank coordination
- FEMA, RBI & tax compliance review
3. Selling Property in India as an NRI? Don’t Lose 12.5% to Excess TDS
When a Non-Resident Indian (NRI) sells property in India, Tax Deducted at Source (TDS) can become a major cash-flow issue if not planned correctly.
Under Indian tax law, the buyer is required to deduct 12.5% TDS (plus surcharge and cess, where applicable) on the sale value, regardless of whether your actual capital gains are much lower—or even nil.
Without proper planning, this can mean lakhs of rupees blocked for months.
The Smart Solution: Apply for a Lower or Nil TDS Certificate (Form 13)
NRIs can legally reduce or eliminate excess TDS by applying for a Lower / Nil TDS Certificate under Form 13 before the property registration.
Why This Matters
- TDS is deducted on the full sale value, not on actual gains
- Refunds take months to process after filing the tax return
- Once deducted, your funds remain blocked with the tax department
Recommended Approach
· Apply for Form 13 before signing or registration
· Ensure TDS reflects actual capital gains, not gross value
· Avoid unnecessary refunds and liquidity issues
Process Overview
· Assessment of capital gains and eligibility
· Preparation and submission of Form 13 with supporting documents
· Application filed through a Chartered Accountant
· Approval typically received within 2–4 weeks
· Buyer deducts TDS as per the approved lower rate
Plan Early. Save More.
TDS planning must be done before registry—not after. Late action can result in significant funds being locked in refunds for extended periods.
NS Global Consultants Pte Ltd specializes in NRI property sale taxation, helping clients legally reduce or eliminate excess TDS through Form 13 (Lower / Nil TDS Certificate) and end-to-end Indian tax compliance.
