The Income Tax Appellate Tribunal (ITAT) has said that NRI status is necessary for seeking gift tax exemptions. This means that NRIs have to make their trips to India shorter if they want to avail the same.

Levy of gift tax is controlled by the Gift Tax Act under which a resident outside India is exempted from the tax, if the 'gift' is from an NRE account.

The necessity of the NRI status for gift tax exemption came up in a ruling of a case involving levy of tax on a gift made by an NRI from his non-resident account.

In the concerned case, the assessing officer and commissioner of gift tax in Kanpur was of opinion that an individual who has lived in India for a period of more than 182 days in a year ceases to be an NRI and cannot claim exemption under the section 5 (1) of the Gift Tax Act.

The residential status of a person is determined by the section 6 of the I-T Act which among other things, says that an individual will be treated as a resident in India if he has stayed for more than 182 days in a financial year.