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Will I have to pay tax in India when my friend transfers money to my bank account in India from US? The amount is $100 USD, and at this time I don't know how the transfer will occur.
I am living in India I have an savings account in Syndicate Bank in India.
Is this amount a taxable transaction? Is there a specific procedure I can follow to avoid a tax (or at least minimize my obligation if there is one?)
As much as I understand you friend is giving you $100 [Say Rs 6000] as gift.
There are 2 taxes;
Service tax: If your friend is using Remittance service. Around 0.12% of amount Rs 6000/-. Around Rs 7.20/-. Normally deducted from Rs 6000.
Gift Tax: The transfer is treated as Gift to you as its from Non-Relative, without any occasion. If the amount of Gift is more than Rs 50,000 a financial year, then you have to pay tax as per your tax slab for the entire amount. As the transfer in question is less than Rs 50,000 there is no tax liability.
Further you are paying this to your friend, which again is looked upon as a Gift and if you friend receives more than the specified amount.
