One has to keep in mind the provisions of the Gift Tax Act and the Income Tax Act while sending money to India.

According to the Income Tax Act, all Income earned out of India by NRI's is exempt from tax. Hence, any remittance to India out of this income will not attract any tax. This means that if you send money to your own account in India, whether NRE, NRO or any other account, there will not be any tax on the transaction. You are free to utilise the amount in India in whatever way you want. Of course, the Indian income accruing on this amount when invested in India will attract taxes.

The second course could be to send the money as gift to a Resident relative.

As per the Gift Tax Act, following categories of Gifts made by the NRI's are exempt from taxes:

1. Gift of foreign currency by an NRI to a resident relative, of convertible foreign exchange, remitted from abroad.

2. Gift by an NRI out of the balance in his Non-resident (External) Account.
3. Gift of a foreign exchange asset by an NRI to a relative.

As can be seen from above, the gift if it is sent in convertible foreign exchange from abroad qualifies for exemption. Hence one can draw cheques, Money Orders, Telegraphic Transfers, Mail Transfers, Bankers Cheques etc, in favour of a relative in India, and it will qualify for exemption under the Gift Tax Act. Of course, there is no Income Tax on the transaction.

Else, one can gift the money by way of transfer from NRE Account. This gift need not be to a relative, though one may be required to prove the genuineness of gift made to a non-relative. As explained above, there is no Income Tax on this transaction too.

Substantial changes have been proposed in the Gift Tax Act in the Union Budget 1998-99, but these changes will not affect the taxability of NRI gifts.