Can an NRI gift shares to parents?

Income Tax
1

Being an NRI, I need to declare my global income in country where I am residing. Due to this I have to pay additional tax in residing country on Indian stocks gain.

So to avoid additional tax, I want to gift stocks to my parents and they sell it so capital gain will be their income and not mine. Then I take this cash as gift.

Since there is no tax implications at my side, can I do it regularly? Will it be problematic in future ?

Thanks
@TeamQuicko, could you please reply.

2

Hey @DeependraY,

Yes, in India any gift transferred to a relative is tax-free. Thus, your parents can pay tax on capital gains and transfer you the balance amount as a gift.

In our opinion, there is no evasion of tax and thus it should not have any implication in India. You should however connect to an expert for the taxation in the country you reside in for the gift amount received by you from India.

3

Thanks. When parents sending money to my NRO account, will this amount be appearing in my income statement ? or do I need to declare it in my income tax return ?

4

Hey @DeependraY,

You can declare the amount as ‘exempt income’ in your Income Tax Return.

5

Hi @DeependraY,

I would be wary about doing what you’re doing. You should be aware that “A Gift” is a voluntary transfer of Cash, Movable /Immovable property by one person to another person without consideration in lieu of love and affection. A competent IT Assessing Officer could make a convincing case that the transfer of shares from you to your parents and the transfer of cash from your parents to you after selling those shares means that neither of the transfers were really gifts since they were not given “without consideration”. In addition, if I’m not mistaken, the taxation of long term capital gains can be different for NRI vs resident Indians. So a case could also be made for tax avoidance depending on your income and the income of the parent(s) taking part in this scheme.

Have you looked at your AIS? It’s something I do before I file my tax return each year and I’ve seen reports of my share transfers in it. If the amounts you’re dealing with are above a certain threshold these transfers will be reported by the reporting organizations (brokers, banks, etc.) and appear in the SFT section and obviously be visible to the IT Assessing Officer.

Russell