Proceeds from sale of property in India can be taxable for NRIs too

Proceeds from sale of property in India will be taxable for NRIs too

I’m a non-resident Indian (NRI) dwelling within the US. I’ve inherited a home in India and wish to promote it. Will the proceeds be taxable in my arms? I wish to purchase one other home with the cash in one of many metro cities in India. For the reason that quantity is anticipated to be substantial, a number of the cash can be left over even after shopping for a brand new home in India. How ought to I repatriate the cash to my US account with minimal tax legal responsibility?

—T. Kalaigar

The proceeds from the sale of a property located in India shall be taxable in India. Capital beneficial properties on property that’s inherited are taxable within the arms of the heir. For the aim of calculating beneficial properties, the interval of holding of the unique proprietor shall even be thought-about. Additionally, the price of acquisition of the unique proprietor shall be taken as the price of acquisition for the aim of calculating capital beneficial properties in your arms.

Any property that’s held for greater than 24 months shall be thought-about as a long-term capital asset. Lengthy-term capital beneficial properties (LTCG) are calculated by deducting the listed price of acquisition from the sale value. LTCG is taxable on the charge of 20% (further cess and surcharge).

In the event you re-invest your capital beneficial properties in specified bonds or a residential home in India, you’ll be able to declare exemption from LTCG tax. The brand new home ought to be bought one 12 months earlier than or two years after the date of switch or constructed inside a interval of three years from the date of switch.

You may as well spend money on capital beneficial properties bonds as much as 50 lakh in a single monetary 12 months. The property shouldn’t be bought inside three years of the acquisition and the bonds can’t be bought for 5 years.

As per the Reserve Financial institution of India (RBI) guidelines, NRIs are allowed to remit as much as $1 million from the sale proceeds of a property in India from their non-resident unusual (NRO) account primarily based on a certificates from a chartered accountant, as prescribed.

Additionally learn: Why farm politics does not win elections in India

I’m a US nationwide and an OCI (Abroad Citizen of India). I don’t pay any tax in India. My father is an Indian nationwide and is trying to ship me cash in extra of 50,000. Would he should pay further taxes with the intention to ship me the cash? In that case, what are the bounds on the sum of money he can ship in a given 12 months? How a lot tax would he or I’ve to pay in India? Additionally, the quantity obtained can be nicely beneath the quantity of reward threshold (about $14,000) that’s taxable inside the US. Please advise.

—Title withheld on request

Any presents made to relations are exempt from tax in India. As per the Revenue-tax Act, presents exchanged between son and father are usually not taxable in both’s arms. Due to this fact, you might be allowed to obtain this reward out of your father with none tax implication for you or on your father.

Additionally, there is no such thing as a financial restriction on such presents. As per present guidelines, a resident can ship $2,50,000 in a single monetary 12 months. Sure varieties resembling Kind 15CA and Kind 15CB could also be required by the financial institution, and an professional can help you with these. Be aware that TCS (tax collected at supply) may apply to the remittance being made, and such TCS could later be adjusted towards your father’s tax dues or else could be claimed as a refund.

Archit Gupta is founder and chief government officer, ClearTax. Queries and views at

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