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I am an NRI in the US. I sent some money to buy property in India. The money was sent from my US bank to my father in India. After 3 years, my father received a note from the income tax dept. asking him to pay income taxes.

My question is, I already paid income tax here and for the sake of ease of transaction I transferred money from the US to his account in India. So this money is already subjected to tax here. The property was bought in my name i.e. registered in my name. Now, the CA is asking him to pay tax in the money I transferred. Is that correct? If not, what should I or he do in this case?

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Ram
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2 Answers2

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The money was sent from my US bank to my father in India

Your father can receive unlimited amount of money as GIFT from you. There is no tax implication on this transaction. Related question

After 3 years, my father received a note from the income tax dept. asking him to pay income taxes.

Possibly because the income does not match and there maybe high value transactions. This should be replied preferably with the help of CA.

Now, the CA is asking him to pay tax in the money I transferred. Is that correct?

This is incorrect. Please change the CA and get someone competent.

If not, what should I or he do in this case?

Get guidance from another CA. Your father can establish that this was convenience and show evidence of transfer from you [need bank statements from your bank and Indian bank]. Property registration payments receipts, etc. Or he can also show this as Gift. If required get a gift deed created.

Dheer
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My two cents on this: For Indian Income Tax purposes, show the transfer as a gift from you to your father. Plus, attach the title deed as proof of your ownership of the property. There are multiple judgments supporting your case.

CA Harshaditya Kabra
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