If I transfer 15 Lakhs to a friend's Saving Account who has no source of income, directly from Xoom or from my Indian NRO account. Will my friend be bothered by income tax department? What are the tax implications for my friend? What kind of paper trail is required to be maintained in order to validate the funds transfer to IT department, just in case?

Answers to the above question will be highly appreciated.

Thanks! MV

1 Answer 1


What are the tax implications for my friend?

This would be treated as gift to your friend and included in this regular income. One has to pay taxes as per normal tax brackets.

I transfer 15 Lakhs directly from USA via Xoom or through my Indian NRO account?

If you are US tax resident, there is limit on amount of 14K per year per person towards gift tax; if the amount you are gifting is more, one has to pay gift tax in the US.

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    For US citizens and permanent immigrants (and possibly for non-citizen non-immigrants who are nonetheless US tax residents as well), gifts of more than US$ 14K require that a gift tax return (Form 709) be filed with the IRS (not attached to Form 1040; it goes to a different IRS office). However, no gift tax need be paid if the OP requests (on Form 709) that the amount of the gift over US$ 14K be counted towards the lifetime gift and estate tax exclusion (currently over $US 5M). If reduction of this exclusion is a serious concern, many lawyers will be eager to assist the OP. Aug 16, 2017 at 15:22

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