• Transfer from husband NRE account to wife NRO account

Hi,
Both me and my wife are in Philippines (i am working, while she is a dependent). I got her NRO account opened in the same bank (AXIS) where i have an NRE account in India. The money i will xfer from my NRE account to her will be used by her to Trade in the Indian stock market.

1) Is there any issue or challenges do you see with the set up ? both for compliance or tax 
2) Is it better to xfer from my NRE to NRO and then further xfer to her NRO or i can just xfer from my NRE To NRO
Asked 23 days ago in Income Tax

Firstly under Indian Income tax if a husband gifts any amount to wife without consideration then any income earned by wife using that amount would be taxed in hands of husband.

 

You can do it anyway if you are going to show it as gift.

If you will show it as loan you can give only rupee loan and that can be done from NRO account and we need to check other FEMA rules.

 

Hope you find the information helpful, if yes do rate if 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
3893 Answers
52 Consultations

5.0 on 5.0

Hi

 

Transfer of money in such case is not an issue. You can transfer the money.

 

However, any income earned by your wife on any investments made from the money sent by you, shall be taxable in hands. Clubbing provisions of income are applicable in such transfers.

Lakshita Bhandari
CA, Mumbai
5572 Answers
661 Consultations

5.0 on 5.0

1) Income from trading in Indian stock market will be clubbed in your hands and you will be liable to pay tax on such income. NRIs are permitted to trade on Indian stock exchange.

2) It is better to open her NRE account and transfer from your NRE account to her NRE account. She should made investment her NRE account.

Vivek Kumar Arora
CA, Delhi
4243 Answers
408 Consultations

5.0 on 5.0

No FEMA violation. Refer https://www.nseindia.com/trade/members-faqs-nri-trading-account for detailed FAQ.

Lakshita Bhandari
CA, Mumbai
5572 Answers
661 Consultations

5.0 on 5.0

- There is no violation. In such case transfer amount from your NRO account to her NRO account. If the payment for purchase of shares is on repatriation basis then funds should be utilized from NRE account otherwise you may use either NRE or NRO or both accounts.

Vivek Kumar Arora
CA, Delhi
4243 Answers
408 Consultations

5.0 on 5.0

Trading through NRO has no FEMA regulation.

FEMA would affect when you transfer her the amount.

Naman Maloo
CA, Jaipur
3893 Answers
52 Consultations

5.0 on 5.0

Ask a Chartered Accountant

Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
  Ask a CA