$500,000: what two Indian parents can jointly send an NRI child buying property abroad

By Max Stephani

Two resident Indian parents can each use the Reserve Bank of India’s Liberalised Remittance Scheme to send up to $250,000 abroad in a financial year.

That creates a potential $500,000 combined family remittance, but there is an important catch: the two $250,000 limits belong to the individual parents. They are not one shared family allowance.

For families helping an NRI or OCI child buy a home overseas, the ownership structure, purpose of the remittance and tax treatment can all matter.

The difference between sending the money as a gift, acquiring the property jointly, or trying to structure it as a loan can be significant.

The $250,000 limit belongs to each parent

Under the LRS, a resident individual can remit up to $250,000 per financial year, running from April 1 through March 31, for permitted current- or capital-account transactions. The RBI specifically permits LRS funds to be used to acquire immovable property outside India.

So, if both parents are resident individuals and neither has used their LRS allowance elsewhere during the financial year, each has a separate $250,000 ceiling.

That gives the family two individual limits:

But that does not mean one parent can transfer $500,000 under the other parent’s PAN.

Each parent must make their own remittance and comply separately with the LRS requirements.

The RBI also allows family members’ remittances to be consolidated for certain transactions. For an overseas property purchase, the RBI says remittances may be consolidated among relatives who are resident in India, subject to the LRS conditions.

That makes the ownership and payment structure important before the money moves.

The child being an NRI changes the mechanics

An NRI or OCI child does not get an additional LRS allowance simply because the child is the intended recipient.

The LRS facility belongs to people who are resident in India under FEMA.

A resident parent can, however, make a rupee gift to an NRI or PIO close relative by electronic transfer or crossed cheque. The RBI says the gift can be credited to the recipient’s NRO account and counts against the resident parent’s $250,000 LRS limit.

That creates an important distinction.

A parent sending money directly as a gift to an NRI child is using the parent’s LRS limit.

A parent participating in the acquisition of overseas property is dealing with the separate RBI rules governing acquisition of foreign immovable property and consolidation of family remittances.

Those are related but not identical transactions.

A gift can be simpler than making the parents co-owners

For many families, the basic structure is a gift from the parents to the child.

Indian income-tax law generally does not tax money received by an individual from a defined “relative” under Section 56(2)(x). The statutory definition includes lineal ascendants and descendants, which covers parents and children.

So a genuine gift from parents to their child is generally outside the Section 56(2)(x) tax charge in India, even when the amount is substantial.

That does not mean the transaction is paperwork-free.

The bank will still need the remittance to comply with FEMA and LRS requirements. The purpose of the transfer should be recorded correctly, and the family should retain the gift documentation, bank records and evidence showing the source of funds.

The country where the property is being purchased may also impose its own tax, reporting or foreign-exchange rules.

A loan is not simply another version of a gift

The RBI does permit a resident individual to make an interest-free rupee loan to an NRI or PIO relative under the LRS.

But the facility has specific conditions.

The loan must have a minimum maturity of one year and remain within the lender’s $250,000 LRS limit. The RBI rules also require the loan to be credited to the NRI’s NRO account. Most importantly, the specific facility has restrictions on how the loan can be used and says the loan amount cannot be remitted outside India.

That means families should not assume that an RBI LRS loan to an NRI child can simply be used as a general-purpose overseas house-purchase loan.

A family considering a loan structure should have the authorised dealer bank and a qualified FEMA adviser confirm that the exact transaction is permitted before transferring the money.

For a straightforward family contribution, a properly documented gift may be materially simpler.

The $10 lakh TCS threshold is per remitter

There is another number that becomes important once the remittances get large: ₹10 lakh.

For LRS remittances, the TCS threshold is ₹10 lakh in a financial year. From April 1, 2026, remittances for purposes other than specified education and medical categories attract TCS at 20% on the amount above that threshold. Gifts and other non-education/medical LRS purposes fall into the “other purposes” category.

The threshold is relevant to the individual remitter, rather than being a single family-wide ₹10 lakh allowance.

For example, if both parents make separate qualifying remittances, each parent’s LRS/TCS position is calculated based on that parent’s own remittances and PAN-linked transactions.

TCS is also not the same thing as a final tax liability. The amount collected is credited against the taxpayer’s tax account and can generally be claimed when the income-tax return is filed.

The practical issue is cash flow.

A large transfer can therefore require substantially more money to be available at the time of remittance than the amount ultimately intended for the overseas property.

Example: two parents sending money to an NRI child

Suppose two resident Indian parents have not made other LRS remittances during the financial year.

Parent 1 wants to send $250,000.

Parent 2 wants to send another $250,000.

Each parent can potentially use their own $250,000 LRS ceiling, subject to the applicable FEMA requirements and the precise structure of the transaction.

The combined family amount can therefore reach $500,000.

But the documentation should not simply describe this as “one family sending $500,000.”

There are two separate remitters, two separate LRS limits and potentially two separate TCS calculations.

And if the parents are acquiring an interest in the property themselves, the ownership structure needs to match the FEMA rules for consolidating family remittances.

What happens if the parents become co-owners?

This is where the transaction can become more complicated.

If a parent actually becomes a legal or beneficial owner of an overseas property, that parent has a foreign asset rather than merely having provided money to a child.

For Indian income-tax purposes, Schedule FA requires qualifying foreign assets to be disclosed by taxpayers who are Resident and Ordinarily Resident in India. Foreign immovable property is specifically covered. NRIs and Resident but Not Ordinarily Resident taxpayers generally do not file Schedule FA.

The distinction therefore matters:

Parent sends money as a genuine gift: the child owns the property, and the parent does not automatically acquire the foreign property simply because the parent funded it.

Parent becomes a co-owner: the parent has acquired an overseas asset, which can create separate Indian reporting obligations if the parent is ROR.

The property country can also have its own rules for determining beneficial ownership, gift taxes, stamp duties and reporting requirements.

Foreign-asset disclosure can carry serious penalties

Schedule FA is not an income threshold test.

For an ROR taxpayer, qualifying foreign assets generally have to be disclosed even if the asset produced no income. Foreign immovable property is among the assets covered by the disclosure regime.

Failure to disclose a foreign asset can attract a penalty of up to ₹10 lakh per undisclosed asset under the Black Money Act, subject to the statutory rules and exceptions.

That makes the ownership decision important before the property purchase rather than during the following year’s tax filing.

A parent who is merely funding a child’s purchase and a parent who is registered as a co-owner are not in the same compliance position.

The numbers at a glance

The $500,000 headline needs one big asterisk

The idea that two resident Indian parents can each use a $250,000 LRS limit is correct.

But $500,000 is not a magic family allowance.

The parents cannot simply pool their limits into one parent’s name. Each person must independently qualify as a resident individual and comply with the LRS rules.

For an NRI child buying a home abroad, the cleanest structure may be a properly documented gift, but the exact payment route and ownership structure need to be checked against the RBI rules and the law of the country where the property is located.

A co-ownership arrangement creates a different set of foreign-asset reporting issues. A loan has its own RBI restrictions and should not be treated as interchangeable with a gift.

And for large transfers, TCS can create a significant upfront cash-flow requirement even though the amount collected is generally available as a tax credit.

The key is to decide who is sending the money, why the money is being sent, and who will legally own the property before the first transfer is made.

Sources

• Reserve Bank of India, Master Direction on the Liberalised Remittance Scheme
• Reserve Bank of India, LRS FAQ on family consolidation and overseas property
• Income Tax Department, Section 56 and treatment of gifts from relatives
• Income-tax/TCS guidance and current 2026 LRS rates
• Income-tax reporting guidance on Schedule FA and foreign immovable property