Shanu gifted Meenal, who lives in Japan, a luxurious watch and an I-Pad. On which side of the BoP account shall the transaction be recorded?

Debit side of current account

As there is outflow of currency it means it will be on the Debit side of the account. Now, the question is whether it will be in the capital account or current account. Capital account records all the transaction which affects the assets and liabilities of the countries. Whereas, current account records all the transactions of good and services and which are recurring in nature. Thus, flow of goods to the foreign currency in the form of gifts i.e. unilateral transfer will be recorded in the debit side of current account.