Can a resident Indian transfer shares to NRI as a Gift?

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Yes, a resident Indian can transfer shares to NRI by way of a gift only post obtaining prior approval from RBI.

A resident Indian need to submit the below documents to RBI while applying for approval to transfer the shares as a gift to NRI:

  • Name and address of self and the NRI.
  • Declare the relationship between self and NRI.
  • Purpose of the gift.
  • Certificate from a Chartered Accountant for valuation of shares to be gifted.
  • Certificate from the company declaring that the proposed transfer to NRI neither breaches the applicable sectoral cap/ FDI limit in the company nor does it exceed 5 percent of the paid-up capital of the company.
  • Undertaking that the value of shares to be transferred or already transferred (if any) in the past does not exceed the rupee equivalent of USD 50,000 during a financial year.

From the taxability perspective, an NRI gets a tax exemption (irrespective of the value) when the gift is received from a relative (as defined in Section 6 of the Companies Act) or for marriage. Otherwise, an NRI is liable to pay tax when the value of shares exceeds Rs.50,000.


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