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October 2022

Gift of Foreign Securities

By Dr. Anup P. Shah, Chartered Accountant
Reading Time 9 mins
INTRODUCTION

Who does not like to get a gift? More so, when it  comes from abroad? However, there are a variety of laws that apply to a gift of foreign securities received by a resident from a non-resident or vice-versa. Let us consider some of the important provisions in this respect.

FEMA, 1999

The Foreign Exchange Management Act, 1999 and the recently enacted FEM (Overseas Investment) Rules, 2022 permit a person resident in India to receive a gift of foreign securities as follows:

(a)    Without any limit from a person resident in India by way of inheritance (i.e., by way of a Will or intestate succession on death) if the donor has been holding the foreign securities in accordance with the applicable FEMA provisions;

(b)    Without any limit from a person resident outside India by way of inheritance;

(c)    By way of a gift (different than a receipt under inheritance) from a person resident in India if the donor is a relative (as per the definition under the Companies Act, 2013) of the donee, and has been holding the foreign securities in accordance with the applicable FEMA provisions; and

(d)    By way of a gift from a person resident outside India on compliance with the applicable provisions of the Foreign Contribution (Regulation) Act, 2010.

An Indian resi
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