-
Recent court rulings have repeatedly confirmed that gifts from NRIs to close relatives are lawful and tax-exempt when supported by bank statements and proof of relationship
-
Courts have also clarified that formal gift deeds are not mandatory, though they are advisable for large amounts.
Non-Resident Indians (NRIs) often send money to their parents in India to support daily living, healthcare, or other family needs. From a tax point of view, such transfers are treated as gifts under Indian law. The good news is that gifts from children to parents are fully tax-free in India, provided basic rules are followed, reported taxscan.in.
Under the Income Tax Act, gifts above ₹50,000 in a financial year are normally taxable. However, this rule does not apply when the gift is received from a “relative”. Parents fall under the category of lineal ascendants, which means any amount received from an NRI child is completely exempt from tax, regardless of value.
-
To avoid unnecessary questions from tax authorities, the money should be sent only through proper banking channels
-
These include international wire transfers, SWIFT, NEFT, or transfers through NRE or NRO accounts
-
Clear bank records help establish that the money is a genuine gift and not an undisclosed loan or income
From a foreign exchange perspective, the Foreign Exchange Management Act (FEMA) allows NRIs to remit money freely to family members in India for maintenance. There is no upper limit on such inward remittances, and no prior approval from the Reserve Bank of India is required when transfers are routed through authorised banks. Importantly, no Tax Collected at Source (TCS) applies to money received by parents from abroad.
Recent court rulings have repeatedly confirmed that gifts from NRIs to close relatives are lawful and tax-exempt when supported by bank statements and proof of relationship. Courts have also clarified that formal gift deeds are not mandatory, though they are advisable for large amounts.
As of January 2026, there have been no changes affecting the tax-free status of such gifts. With increased digital reporting and data matching, parents should disclose the exempt gift in their tax returns and maintain proper records. When done correctly, sending money to parents in India remains simple, legal, and worry-free.
