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Rajesh (Analyst)     20 March 2011

Fund Transfer

Will there be any Income tax applicable if my brother transfers amount (around 6 lacs) from his NRE account to my salary account or other saving account?

Do I need to submit any source of income/purpose of transfer for the transaction to the Bank or IT dept.


 4 Replies

CA VK Dwivedi (Job)     21 March 2011

Dear Rajesh,

you have metioned only "Transfer" of an amount and no more detail. Like whether it is Current account transaction or Capital Account transaction under FEMA 2000 and your Residential Status.

I assume you are Residents, and the bottom line in the Income Tax act is a Residents is the one who has to undergo a sacrifice for any transaction leading to income and if you are salaried person then forget the evasion but of course you and plan Tax.  Even if you try not to disclose this transaction then let me remind you provisions of Prevention of Money Laundry Act the Banks are supposed to submit Anual Return with the RBI for these kind of transaction and RBI further shares high value transaction withe the GOI and CBDT.

 But its not like that all the transaction are liable to tax depends on the facts and circumstances dexmption/ deductions may be allowed.


1 Like

Rajesh (Analyst)     21 March 2011

Sir, Thank you for the reply.

Me and my brother are salaried. He is working in U.S. The income is not from any capital gain or business related. The purpose of the transaction is to evidence my assest or networth for visa processing.

He will transfer the amount from his NRE (Indian Bank a/c) to my Corporate(Salary account, Indian a/c) or to any of my saving a/c.  Also I will collect some cash from my other relatives and directly deposit to my a/c. I will be holding this amount for 3 to 6 months only in my accounts till visa process completes.

Let me know if the above two transactions (e-transfer and cash deposit) are taxable.

CA VK Dwivedi (Job)     22 March 2011

Dear Rajesh,

okeis, what i understool is that this is not a gift but and you need some money for short duration so as to show to VISA auth. that u have enough balance in your account.

I would suggest you to show it as short term Loan this will not be taxable provided you pay some interest.Since u need this amopunt for 2-3 months to show balance in your account keep this amount into ur accoutn and pay some 2-3% interest or may be the rate existing in US.  Since a Resident is eligible to take loan from NRI or person resident outside india under FEMA 2000 you can show as loan once your purpose (VISA) is met show it as refund of loan the with some nominal interest.

hope this will help you.

VK Dwivedi 

1 Like

Rajesh (Analyst)     22 March 2011

I appreciate your valuable suggestion. Thank you very much.

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