Overview
NRIs (Non-Resident Indians) selling immovable property in India are subject to capital gains tax under the Income Tax Act. The tax implications depend on factors such as the period of holding, acquisition cost, and mode of acquisition (purchase, gift, or inheritance). Proper tax planning can help NRIs minimize their tax liability while ensuring compliance with Indian regulations.
Documents Required
NRIs need the following documents for selling immovable property in India:
- Property Documents (Sale Deed, Purchase Agreement, or Gift/Inheritance Documents)
- PAN Card (Mandatory for tax compliance)
- Aadhaar Card (if applicable)
- Bank Account Details (Preferably an NRO Account for transactions)
- TDS Payment Proof (If applicable)
- Capital Gains Calculation Statement
- Registered Sale Agreement
- Tax Exemption Proofs (If claiming exemptions under Sections 54, 54EC, or 54F)
Benefits
- Tax Efficiency: Proper tax planning can help in reducing or deferring tax liability.
- Legal Compliance: Ensuring adherence to Indian tax laws and FEMA regulations.
- TDS Refund (if applicable): NRIs can claim a refund or obtain a lower TDS certificate to avoid excessive tax deduction.
- Repatriation of Funds: Assistance in transferring sale proceeds abroad as per RBI guidelines.
How We Can Help You
At A Square Finserv, we offer expert assistance in:
- Capital Gains Tax Calculation & Compliance
- Tax Planning to Reduce Tax Liability
- Obtaining a Lower TDS Certificate from the IT Department
- Guidance on Repatriation of Sale Proceeds
- Advice on Exemptions under Section 54, 54EC, and 54F
- Ensuring Compliance with FEMA & RBI Guidelines
FAQs (Frequently Asked Questions)
1. What will be the cost of immovable property acquired through inheritance or gift?
For inherited or gifted property, the original cost of acquisition (by the previous owner) is considered, along with indexation benefits if applicable.
2. Why is Stamp Duty Valuation important?
Under Section 50C, the sale value cannot be lower than the Stamp Duty Valuation (Circle Rate), and the higher of the two is considered for tax purposes.
3. How can NRIs reduce or avoid capital gains tax on property sales?
- Invest in another residential property (Sec 54)
- Invest in Capital Gains Bonds (Sec 54EC)
- Reinvest in specific assets (Sec 54F for reinvestment in a new property)