I am Indian Resident, and would like to gift my daughter who is PIO as well as US Citizen now

Question

I am Indian Resident, and would like to gift my daughter who is PIO as well as US Citizen now. Pl answer following queries :

1. Will gift tax be applicable in such case to donor (per Indian law) and/or donee (as per US Laws) for my inherited portion of land sale if amount to be transferred is less than INR 90 Lakhs?
2. Can i ask my NRI Buyer friend abroad to transfer this money on my behalf directly in USD? What are the relevant Tax implications for all 3 of us (ie. Seller, Buyer, Daughter)? Will this be treated as Gift or Capital Gains Income for my Daughter?
3. Should either of the above two(2) transactions be classified as GIFT, or simply a MONEY TRANSFER? What are the Tax implications?
4. If Gift, what are relevant applicable documents for proof of source of funds?
5. Is Any further clarity required to answer above??

Answer 1

Will gift tax be applicable in such case to donor (per Indian law) and/or donee (as per US Laws) for my inherited portion of land sale if amount to be transferred is less than INR 90 Lakhs?

As per Indian laws this would be under Gift Tax. You can gift unlimited amount of funds to close relatives; i.e. daughter. There is no tax implication to you or your daughter in India.

As per US taxation, the Gift tax is on the donor and not the recipient. If you were an US Citizen, you would be liable or take exemption from estate limit. As you are not US Citizen, this is not applicable to you. There is no US tax implication to your daughter.

Can i ask my NRI Buyer friend abroad to transfer this money on my behalf directly in USD? What are the relevant Tax implications for all 3 of us (ie. Seller, Buyer, Daughter)? Will this be treated as Gift or Capital Gains Income for my Daughter?

No this is incorrect and could be in volition of FMEA. The best procedure is to sell the land and get funds in your name in India. Pay the appropriate taxes and repatriate funds to your daughter. Form 15CA and 15 CB need to be filled.

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