Could You do Investments for Your NRI Son?

Original Query 1:

Can I, as a registered power of attorney holder for my NRI son, invest the proceeds from selling his two properties in 54 EC bonds on his behalf? And what’s the maximum investment limit?

Answer: As the appointed power of attorney, you have the authority to sell your NRI son’s properties if the power of attorney is specific to these assets. It’s advisable to seek legal counsel to understand the stamp duty implications associated with this specific power of attorney.

Section 54EC facilitates tax exemption on long-term capital gains from property sales. To avail of this benefit, reinvest the capital gains in specified bonds within six months of property transfer.

Section 54EC of the IT Act, 1961, says that if an investor earns long-term capital gains by selling their immovable property or shares and re-invests them in specified long-term assets within six months from the sale date, they can claim tax exemption on such capital gains.

The maximum investment allowed under section 54EC is ₹50 lakh. There’s no cap on the number of properties whose gains can be invested, as long as the total investment remains within the ₹50 lakh limit.

Original Query 2:

I’m a British citizen with an OCI card, holding NRO deposits and a savings account in India. Can I gift money to my nephew in India from my NRO FD or savings account? Will this gift have any tax implications for me?

Answer: You’re permitted to gift money to a resident relative from your NRO FD or savings account.

Indian tax laws focus on taxing the receiver of the gift. As your nephew is a qualifying ‘relative’ under the relevant tax provisions, the gifted amount won’t be taxed in his hands.

Even if the gift surpasses ₹10 lakh, since your nephew doesn’t fall under the Foreign Contribution regulations’ criteria for a ‘relative,’ assuming you both aren’t part of the same HUF, he won’t have any filing obligations under these regulations.

Send your questions to donald@simplepath.in