As per the income tax law in India, any amount surpassing ₹50,000 received without consideration from any person is taxable in the hands of the recipient. Despite, contributions from stipulated kin are not subject to tax. Hence there will no tax implications in India on the transfer of funds from your father’s account to your NRO account and then to your NRE account.
Nevertheless, any income earned from such funds in your NRO account such as interest income will be subjected to tax norms. Abatement under Section 80TTA may be possible on interest income up to ₹10,000 earned on savings account by an individual who is not a senior citizen. The interest earned from NRE accounts are exempted from tax in India only if you qualify as a person residing outside India as per the Indian law or if you are authorized by the Reserve Bank of India (RBI) to maintain such an account. The rules and regulations for determining residential status under the exchange control law are different from that under the income tax law.
One can avail of the privilege of evading a double tax treaty between India and the country of your residence for the rate of tax payable on interest on NRO account. However, this is subject to providing of tax residency certificate and other necessary documents, credit, taxes paid, income status, etc in the country of residency and in India.
NRIs are usually permitted to send or transfer up to $1 million from an NRO to NRE account only on providing necessary documents as proof for confirmation. Any remittance made by NRIs into such accounts that exceed ₹1 million needs special permission and authorization from the RBI.
Amid the global pandemic crisis and the resultant economic turbulence, the Finance Bill 2020 was passed by the Parliament with some major relaxations in the previous quarter. While passing the Bill, the amendments had initially proposed in the guidelines determining ‘residential status’ in India of a person with respect to the Finance Bill 2020 to be relaxed. As such a change was expected to have a direct impact on the non-resident Indian (NRI) community. The Finance Bill 2020 had received the President’s assent on March 27, 2020, and has now become Finance Act 2020.
