Key takeaways
- LRS: US$250,000 per parent per year; TCS of 20% above ₹10 lakh, refundable.
- No Indian tax for parent or child on the gift.
- No tax on receipt in the US, UK, Canada or Australia; US Form 3520 above US$100,000.
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The India side
| Point | Rule |
|---|---|
| How it is sent | Under the Liberalised Remittance Scheme (LRS), from the parent’s own bank account |
| Limit | US$250,000 per parent per financial year, so up to US$500,000 from both parents |
| TCS | 20% on the amount above ₹10 lakh a year, collected by the bank. It is not a cost: the parent claims it against their tax or as a refund |
| Indian tax for you | None. Gifts from relatives, including parents, are exempt |
| Indian tax for your parents | None on the gift itself. Income you later earn on it is yours |
Another route: your parents can gift rupees into your NRO account. That is still within their LRS limit, and getting it abroad from NRO needs Forms 145 and 146.
Your country’s side
| Where you live | Tax on the gift | What to watch |
|---|---|---|
| United States | None | Form 3520 if gifts from foreign persons exceed US$100,000 in the year |
| United Kingdom | None | Keep the gift letter; your bank will ask about the source of funds |
| Canada | None | Lenders want a gift letter for a house deposit; T1135 if you then hold foreign property over CAD 100,000 |
| Australia | None | Keep evidence that it is a gift, not income or a loan |
| Europe | Possibly | Germany, France, Spain, Ireland and the Netherlands can tax gifts received by residents |
Paperwork that makes it smooth
- A short gift letter from each parent: amount, relationship, “no repayment expected”.
- Parents’ PAN and their bank’s LRS form (A2) and declaration.
- Proof the money is theirs: bank statement, FD maturity or sale deed.
- Your account details abroad, in your name.
Common mistakes
- Sending from a relative’s account but calling it the parent’s gift.
- Forgetting that the TCS is refundable, and losing it by not claiming it in the parent’s return.
- In the US, missing Form 3520 because “there was no tax”.
Related: TCS on foreign remittances, the TCS calculator and the transfer checker.
Sources
Frequently asked questions
How much money can parents in India send to their child abroad?
Up to US$250,000 per parent per financial year under the Liberalised Remittance Scheme, so up to US$500,000 from both parents.
Is TCS charged when parents send a gift abroad?
Yes. TCS of 20% applies to the amount above ₹10 lakh in a financial year. The parent can claim it against their income tax or as a refund.
Is a gift from parents in India taxable for an NRI child?
Not in India: gifts from relatives are exempt. In the US, UK, Canada and Australia there is no tax on a gift received, though the US requires Form 3520 above US$100,000 a year.
Do I need a gift letter?
It is strongly advised. Banks abroad and lenders ask for one, and it shows the money is a gift and not income or a loan.
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.