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I am planning to transfer around $8K-10K in my parent's bank account(Joint bank a/c) in India . I have read a lot of posts(like Will I have to pay taxes in India when I transfer money from a US bank to an Indian savings account?) but I am still not sure if my parents will need to pay taxes on the money that I send them since it is not a NRI/NRE/NRO account?

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    The answer might or might not depend on whether you are a citizen of India or not. Indian banks that handle the transfer routinely ask for a reason for the transfer and things like "Family maintenance" or "Family medical biils" satisfy them. As far as I know, recipients of money sent by noncitizens of India do not have to pay any gift tax on the money, and the noncitizens are not charged any income tax by Indian Revenue either. The rules might be different for citizens of India with status such as NRI and RNOR or holders of temporary work (H) or student (F) or notable visitor (J) visas. – Dilip Sarwate Sep 4 '13 at 22:51
  • I am an Indian citizen and am on F-1 visa here in the US...my father will be using the money to pay off my education loan... – nikhil Sep 6 '13 at 9:31
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Any inward remittance received by your Parents cannot be treated as "Income" as per the definition. This can at best be treated as "Gift". However, in India there is No Gift tax for certain relations and there is no ceiling on the amount. In your case, gifting of money by son to father or vice versa is allowed without any limits and tax implication. However if your father were to invest this money in his name and make gains, the gains would be taxable.

However if the Money is being transferred with a specific purpose such as to buy a property, etc make sure you have the Bank give your dad a Certificate of Inward remittance. This is also advisable even otherwise, the Inward Remittance certificate from Bank certifies that the credit entry in the account is because of funds coming into India and if the tax authorities were to question the large amount of credits, it would be proof that it is due to Inward remittance and not due to, say, a sale of property by your dad.

Helpful Links:

Edit 1:
What your father does with the money is treated as EXPENSE, i.e. spends on day to day expense or pays off your Loans or pay off his loans have no relevance from a Tax Perspective in India.

The only issue comes in say you have transferred the funds to buy a property and there was no purpose of remittance specified by Bank's letter and one wants to repatriate this funds back to US, then it's an issue.

If you transfer the funds directly to your Loan account, again there is no tax implication to you in India as you are an NRI.

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    that is really helpful...what if my father will use the money to pay off my education loan? Also if I were to directly transfer money to the loan account(joint a/c of my father and I) , would that be taxable? – nikhil Sep 6 '13 at 9:28

protected by Chris W. Rea Feb 13 '16 at 0:22

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