New Delhi, June 11 -- From India's income tax perspective, a gift from a parent to a child is not taxable in the hands of the recipient, as children fall within the definition of "relative" for the purposes of section 56(2)(x) of the Income-tax Act, 1961, and the corresponding provision under the new income tax law, as applicable. That said, the source of funds should be properly documented and the remittance should be made through banking channels in compliance with the LRS requirements. Such a remittance will also be subject to tax collected at source @20% on the amount in excess of Rs.10 Lakhs in a financial year.

The more commonly missed issue arises in the US. If a US person receives aggregate gifts of over $1,00,000 from a foreign ...