NRIs Selling Property Have to a Pay Capital Gains Tax

By Mr. Sandeep Shanbhag, Director, Wonderland Consultants

Any NRI (Non-Resident Indian) / or  PIO (Person of Indian Origin)  will be required to pay tax on capital gains. If NRI or  PIO  holding period is less than three years (36 Months), it would be treated as STCG (short-term capital gains) and if more than 3 years that, as LTCG (long-term capital gains).

Mr. Sandeep Shanbhag, Director, 
Wonderland Consultants

LTCG is to be computed by deducting from the full value of the consideration..!

** Any expenditure incurred in connection with the property  transfer;

**  Indexed cost of acquisition; and

**  Indexed cost of improvement.

Formula..

Indexed cost =

Actual cost x (index for the year of sale / index for the year of purchase)

(Actual cost = Buying Cost -  Any expenditure incurred in connection with the property transfer (stamp duty, Broker fees, Advocate fees)

LTCG is taken as a separate block and charged to tax at a flat rate of 20.6%. No deductions are allowed under Chapter- VI A such as u / s 80 C (PPF, Life Insurance Premimum, Pepaying Home loan Principal) , 80 D (Mediclaim Policy Premium) etc, for LTCG.

STCG is treated as normal income and taxed at the rates applicable to the normal income. Deductions under Chapter-VI A can be claimed.

Repatriation US $ 10 lakh Per Year..!

On sale of an immovable property (Plot of land and House) by an NRI / or PIO, the foreign currency equivalent as on the date of payments towards purchase of the property can be repatriated in case the amount has been received from inward remittance or debit to NRE / or FCNR / or NRO account for acquiring the property.

Repatriation of sale proceeds of a residential property is restricted to not more than two ( 2 ) such properties. There is no restriction on repatriation of number of commercial properties. If any one have purchased the property out of your Indian assets, then also the sale proceeds net of  income tax, up to US $ 10 lakh per year may be remitted abroad.

The remittance can be effected upon the uploading of an undertaking (Form 15 CA) by the remitter and submission of a certificate by a Chartered Accountant (Form 15 CB) to the banker.

About the author..!

By Sandeep Shanbhag is Director at Wonderland Consultants, a tax and financial planning firm.

He can be contacted at sandeep.shanbhag@gmail.com

Wonderland Consultants,

Bloomfield’s, Village-Bashing, Post Office- Babeli,

Tehsil & Distt. Kullu (H.P.) 175 138, India

Ph: +91 - 1902 - 201413,  +91 - 1902 - 204413

Fax: +91 - 11 - 6617 3413 (Visit with prior appointments only)

Email: wonderlandconsultants@gmail.com,

wonderlandconsultants@hotmail.com

Web Site: http://www.wonderlandconsultants.com/

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