Does an NRI get taxed for gifting savings to his father’s HUF? Does this fall under Income from Other Sources? Explained

An NRI living in the UK asked Mint Money about gifting savings to his father’s HUF. He wanted to know about possible tax implications.

Now, gifting money doesn’t create tax liability for him. This is because gifts made by a person aren’t taxable for the giver.

However, the HUF’s tax treatment needed separate consideration. Under the Income Tax Act 2025, HUFs receiving gifts are subject to specific rules.

Generally, money received without consideration counts as taxable income. This falls under “Income from Other Sources” for tax purposes.

An important exception exists for gifts from relatives. For HUFs, members are legally considered relatives under this provision.

This exception applies since the questioner is a member of his father’s HUF. Therefore, the gifted amount wouldn’t be taxable for the HUF.

However, subsequent income earned from these funds is treated differently. Any investment income generated must be clubbed with the member’s income.

This means income earned by the HUF from these investments gets added to the member’s own taxable income.

Regarding foreign exchange laws, receiving gifts from NRIs isn’t restricted currently. This makes such transfers straightforward from a compliance perspective.

A separate query came from an NRI based in Singapore who provides consultancy services. He mistakenly attached the wrong Tax Residency Certificate while filing Form 41.

He asked Mint Money whether he could refile the form with corrections. According to the Income Tax Department FAQs, Form 41 cannot be directly revised once submitted.

However, the e-filing portal currently allows resubmission of the form. If refiled, the original submission automatically becomes non-actionable.

The newly-filed form then becomes the valid version. This applies from the date of refiling for all legal purposes.

So, if he has received his correct 2026 certificate, he can refile Form 41 with accurate documentation attached.

Both these cases highlight important considerations for NRIs managing finances. Understanding tax rules and compliance procedures helps avoid unnecessary complications.

Income tax for NRIs

A Non-Resident Indian isn’t considered a resident for Indian tax purposes. Residential status is determined under Section 6 of the Income-tax Act.

Someone becomes a resident if they stay in India for 182 days or more. Alternatively, 60 days or more, plus 365 days across four preceding years, also applies.

Special exceptions exist for Indian citizens and persons of Indian origin. For these visitors, the 60-day threshold becomes 182 days instead. Similar concessions apply to citizens leaving India for employment or crew duties.

The Finance Act 2020 further amended this exception, effective from 2021-22. The 60-day period was extended to 120 days specifically for high earners. This applies to those earning over ₹15 lakh, excluding foreign income.

A new provision, Section 6(1A), also emerged from this amendment. It deems certain high-earning citizens residents if they are untaxed elsewhere.