Sending money to your parents in India, and getting it back later or on their death

Indian tax treats a gift over fifty thousand rupees as income in the receiver's hands, unless it comes from a relative. A parent and a child are relatives in both directions, as lineal ascendant and descendant, so a gift from you to your parent, and a gift from your parent to you, are both fully exempt, with no upper limit. This is under Section 56(2)(x), which becomes Section 92 from FY 2026-27, with the same rule.

So you can send money to your parents in India without tax, and they can return some to you later without tax. What matters is that each is a genuine gift, ideally recorded in a short gift deed, rather than a loan or a disguised transfer.

Income the gifted money earns is not clubbed back to you. The clubbing rule under Section 64 applies to a spouse, a minor child, and a son's wife, not to a parent and an adult child in either direction.

So if you gift money to your parents and they earn interest or gains on it, that income is theirs and taxed in their hands, often at a lower rate or within their exemption. And when money comes back to you and you invest it, the income is yours. There is no clubbing to trip over, as long as the child is a major and the gift is real.

Money you receive on a parent's death is inheritance, not a gift, and India has no estate or inheritance tax, so nothing is taxed when you receive it. Only the income the inherited money later earns is taxed, in your hands, in the normal way.

Because the money comes from a resident in rupees, whether as a gift or an inheritance, it goes into your NRO account, not your NRE account, which is for money earned abroad. From the NRO account you can send it out of India up to one million dollars per financial year, under the RBI remittance-of-assets route, using Form 15CA and, above five lakh rupees, a chartered accountant's Form 15CB. These become Form 145 and 146 from FY 2026-27.

Vikram, an NRI in the US, gifts thirty lakh rupees to his father, with a short gift deed. His father invests it and earns interest, which his father declares in his own return, at his own lower rate, with no clubbing back to Vikram.

Years later his father gifts fifteen lakh back to Vikram for a purchase, again tax-free as a gift between relatives, into Vikram's NRO account, from where Vikram repatriates it within his one million dollar limit for the year with Form 15CA and 15CB. When his father passes away, the remaining money comes to Vikram as inheritance, untaxed on receipt. Each step is a genuine family transfer, documented, not a scheme to move money.