Tax on foreign funds received

Income Tax Income from Other Sources
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1

Hi, I received a fund from foreign person in my bank account for Rs. 125000, on behalf of my friend and then transferred to his account. Do I need to show this in other income? If yes, under which section I can exempt the taxes for the funds I received.

2

@Bharti_Vasvani can you help

3

Hello @Udhaya_Raj_S,

Any amount received as gift from “non-relative” is exempt upto INR 50,000/-, if amount received is more than 50k, then the full amount will be taxable under IFOS.

This is not income in your hands, its just you have received money on behalf of someone and transferred the same to them, hence not taxable. This is not your income so no need to report it in the ITR. But avoid receiving money from foreign individuals on anyone’s behalf to stay away from notices as now everything gets reported under Annual Information Statement.

Hope this helps!

4

A few question on this topic:

  • Is there a limit on receiving gifts of higher amounts from a relative abroad ( brother)
  • If the received amount is left in a savings bank account and accrues an interest of Rs.1 lakh per year, are there any tax liabilities
  • Does the received amount need to be mentioned anywhere while filing IT returns
5

Hi @mtshyam

Here’s an answer to your questions

  • As per the Income Tax Act, gifts received from relatives are exempt from tax and there is no such specific limit on receiving gifts from relatives, whether received from a relative in abroad.

  • Yes, interest earned from a savings bank account is taxable. Hence, the interest accrued on the received amount is â‚ą1 lakh per year, this interest income would be taxable under “Income From Other Sources” under Income Tax.

  • Yes, It can be mentioned as exempt income under the head “Income From Other Source” (IFOS).

Hope this helps.

6

Thanks Ms.Muskan for the prompt response. Sincerely appreciate it

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