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How can NRIs in the US gift money to their parents in India in 2023?

This article discusses the mechanics and tax exemption rules applicable to US-based NRIs who wish to gift money to their parents in India.

How can NRIs in the US gift money to their parents in India in 2023?


Posted on 04 Jan 2023
Author: Sayan Sircar
5 mins read
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This article discusses the mechanics and tax exemption rules applicable to US-based NRIs who wish to gift money to their parents in India.

How can NRIs in the US gift money to their parents in India in 2023?

Disclaimer: Taxation is a dynamic concept and the content of this article is valid on the date of publication and any subsequent updates. Always consult a professional tax advisor before doing anything that leads to taxes being due.

📚 Topics covered:

This article is for 2023. The latest one is here: How much money can NRIs in the US gift to their parents in India without paying tax?

How much exemption can NRIs in the US get when they gift money to their parents in India in 2023?

USD 17,000 per person is the annual Gift Tax Exemption amount for 2023 as notified by the IRS.

This amount is offset against the lifetime Gift and Estate Tax Exemption limit. This limit is currently at $12.92 million.

Uses of this gifting process could be:

Warning: Money sent to parents becomes part of the parent’s assets. At the time of death, others like the siblings of the NRI child might make a claim against these assets. We have discussed this point in detail here: Who should invest in the name of parents to save tax? Who should not?

What has been the historical exemption limit for gifts?

Serial # Calendar Year Exempted Amount ($)
1 2002 11,000
2 2003 11,000
3 2004 11,000
4 2005 11,000
5 2006 12,000
6 2007 12,000
7 2008 12,000
8 2009 13,000
9 2010 13,000
10 2011 13,000
11 2012 13,000
12 2013 14,000
13 2014 14,000
14 2015 14,000
15 2016 14,000
16 2017 14,000
17 2018 15,000
18 2019 15,000
19 2020 15,000
20 2021 15,000
21 2022 16,000
22 2023 17,000
23 2024 18,000

Download as CSV

You can use this table to plan the total offset against the lifetime Gift and Estate Tax Exemption limit.

Related:
How much money can NRIs gift to parents in India?

FAQs on the mechanics of gifting to parents

Is a gift deed necessary when NRIs gift assets to parents?

There is no tax payable by the gift receiver. However, to be on the safe side from the Indian tax perspective, it is better to create a gift deed.

Which account should be chosen to transfer money to India?

The US-based NRI can transfer money directly to the bank account of their parents. The NRI should not be a joint holder in that account since then it will not be a gift.

If the parents die intestate, i.e. without a will, other legal heirs like siblings of the NRI can lay a claim on the gifted assets. If multiple heirs exist, it is prudent to make a will.

Is there further tax on the gifted amount from NRI to parents?

There is no tax at the point of gifting on the parents. But there will be tax out of any income from the amount that will be paid by the parents since that will be in their name.

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This post titled How can NRIs in the US gift money to their parents in India in 2023? first appeared on 04 Jan 2023 at https://arthgyaan.com


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