Gifting Your Mumbai Flat to a Son or Daughter Abroad: FEMA and Tax Rules

Income tax: is the gift taxed?

• Gifts from relatives are exempt. The tax definition of relative includes your spouse, siblings, parents and grandparents, children and grandchildren, and their spouses, among others.
• A flat received from a non-relative can be taxed in the recipient's hands on its stamp duty value if that exceeds Rs 50,000.
• Since 1 April 2024, certain gifts from residents to non-residents are treated as arising in India. The relative exemption continues to matter, so check your case with a CA.

Stamp duty and registration

A gift deed must be stamped and registered. Maharashtra has a concessional duty for gifts of residential property to close family. See gift deed stamp duty in Maharashtra.

Before you gift

• Think about the child's tax in their country of residence.
• If the flat is rented, the rent becomes the NRI child's income and the tenant must deduct TDS. See TDS on rent to an NRI landlord.
• Update the society records and nomination after the transfer.

Frequently asked questions

Can a resident gift a flat to an NRI son or daughter?

Yes. Under FEMA, an NRI or OCI can receive immovable property other than agricultural land, plantation property or a farmhouse as a gift from a person resident in India.

Is a flat gifted by parents taxable for the child?

Gifts from relatives, including parents, are exempt from income tax. Stamp duty on the gift deed still applies.

Sources

• RBI Master Direction: Acquisition and transfer of immovable property under FEMA
• Tax2Win: Tax on gifts to NRIs in India
• ICICI Bank: Tax implications for NRIs receiving gifts

This is general information, not legal or tax advice. Rules change, so check your own case with a lawyer or CA.

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Warmly,
Yanik