Remitting money to India: Are funds taxable for you or your brother?

I have been working in the US for many years. I want to remit some money to my brother in India. Are these funds taxable in my hands or his? I have already paid tax on the money here. Should I transfer the funds to my account so that my brother can withdraw from it as per the power of attorney given him? In such a case, should I transfer the funds to my NRE or NRO accounts?

Transferring money from the US to India does not create any tax liability for you. You can gift any amount to your brother without any tax implications for you or your brother, as gifts received from specified relatives, including siblings, are not to be treated as income under Indian tax laws.

However, since you are gifting, it is essential to follow proper procedures. The gift being made to your brother must be accepted to complete the transaction.

This communication can be done even over an email, where you express your wish to make a gift to your brother, who in turn accepts it.

Tax-Free Money Transfers: Gifting to Your Brother from the US to India

Please note that the income tax department can inquire into the genuineness of the gift to ensure that it is not a payment made for any illegal transaction or services rendered. The income tax department can also ask your brother to prove the source of your money for gifts made to your brother.

Please note that any income earned on the gifted money is taxable. Note that by giving a gift, you lose the title to the funds gifted. The gift can be made from your NRE or NRO account, and it does not make any difference in tax implications concerning the gift transaction. Since the gift can be directly made from your bank account to the bank account of your brother, there is no need for you to transfer the money to your NRO/NRE account and get the money subsequently withdrawn by your brother under the power of attorney given to your brother.

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Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant his X handle.

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