Guide to FEMA, tax, and UAE compliance when gifting shares of a UAE company to an Indian resident under LRS and POEM rules.
Gifting Shares of a UAE Company to an Indian Resident: Compliance Guide
Transferring shares of a UAE-based company to an Indian resident triggers multiple regulatory obligations under Indian law, including FEMA, the Income Tax Act, and the Liberalised Remittance Scheme (LRS).
Under FEMA, such a gift constitutes a capital contribution under ODI framework if the donee is a relative and within LRS limit (USD 250,000 annually). Form FC-GPR must be filed by the overseas entity if it remains an Indian-owned overseas concern. The donor in UAE must comply with local corporate and gift registration rules; Dubai free zones may require DED approval.
For tax, the recipient may face income from other sources under Section 56(2)(x) if value exceeds INR 50,000 and is not between specified relatives. Schedule FA reporting in ITR is mandatory. Practitioners must coordinate cross-jurisdictional filings to avoid unintentional non-compliance in both jurisdictions.
