Thu Sep 12 01:00:18 UTC 2024: ## Parents Risk Fines for Mishandling NRI Child’s Finances
**New Delhi:** Many parents unknowingly break Indian law when managing their non-resident Indian (NRI) child’s finances, according to experts. Handling property taxes, expenses, or investments through personal accounts rather than the child’s NRO account violates the Foreign Exchange Management Act (FEMA). This could result in hefty penalties and legal trouble.
The key to compliance is a Power of Attorney (PoA). Without a valid PoA, parents cannot legally manage their child’s finances in India. A PoA empowers parents to handle tasks like paying property taxes, managing real estate, and overseeing investments.
“A parent cannot do any financial transactions that are not permissible under FEMA without a PoA,” said Gautam Nayak, a chartered accountant. “It is a clear violation of rules and can lead to a penalty of up to three times the amount involved.”
FEMA violations can lead to fines ranging from one to three times the transaction amount, making a PoA crucial for avoiding these penalties.
Obtaining a PoA is a straightforward process, requiring registration with the sub-registrar and a nominal stamp duty fee. Once registered, the PoA should be submitted to the bank where the NRI child has an account.
Beyond the PoA, NRIs can also appoint a mandate holder or open a joint account with a resident Indian, providing additional options for managing their finances in India while complying with FEMA regulations.
“The PoA not only helps avoid penalties but also gives peace of mind, knowing that your child’s finances are managed properly,” said Nayak.
By obtaining a PoA or utilizing other compliant methods, parents can ensure their NRI child’s finances are handled legally and securely, protecting both the child’s financial future and the parents from potential penalties.
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