Every Indian settler in foreign nation aims to sell their property with reasonable profit. The life of a Non-Resident Indian (NRI) may show up in addition to rich and simple to many. But the truth in realty is never so. Numerous NRIs discover it outrageously confounding to comprehend the particular tax implications of attempting to purchase or sell a property in India.
This is to a great extent because of absence of sufficient data just as misdirecting information circulating on the Internet. We can’t right such deception yet we should try. In our element centre around NRIs, we will deeply highlight the important tax implications for NRI clients who wish to sell properties in India.
Let’s check out some of the major elements required to know before selling a property in India:
One of the basic differences between resident Indians who sell a property and NRIs is that Tax Deducted at Source or TDS of 1% is deducted for Indian residents, but this is not the same for all the NRIs. There are many types of NRIs who unknowingly lose a lot of hard earned money as they are not fully aware of the TDS rules.
When any type of property is sold by an NRI, it is highly important to reduce 20.66% TDS from its selling price if this is a long-term capital gain. Long-term capital gains tax is a tax paid on a specific type of property held for more than 24 months. If the property has been kept for less than 24 months, it is termed as short-term capital gain. In this type of case, the TDS becomes 33.99% of the income tax of the NRI, irrespective of his or her income tax slab set by government.
An NRI required paying capital gains tax only when there is capital gain from the sale of the property, but instead, whole TDS is calculated upon total sale value of the entire property. Since there is no proper gain, the NRI usually incurs a loss from the sale of the property if a TDS refund is not claimed. Therefore they must reach the Income Tax department for full TDS refunds.
What type of population pays TDS?
Who will be the one considered answerable for paying TDS? If a property is offered to an individual, would he say he is the person who deducts TDS and pays to the Government? The appropriate response is yes. This individual should get a Tax Deduction Account Number (TAN) and should get a TDS certificate for the same.
Here is an approach to spare you from paying capital increases tax. Long haul capital gains, which are acquired from the sale of property, can be placed into charge absolved securities, which will help save you from paying long term capital addition tax. In such a case, the NRI can apply for a Tax Exemption certificate from the Income Tax office according to segment 195 of Income Tax Act, 1961.
In the event that the long term resource is sold and the capital increases sum is in this way put resources into REC and NHAI bonds within a half year of the date of sale, at that point you will be excluded from capital additions charge. Bonds will remain locked for three years.
Tax implications also exist for NRIs on property they have inherited. In such cases, one should ascertain the date of acquisition of the property from the first proprietor to decide if it’s long term capital gain up or momentary capital increase.
If you are preparing to invest on real estate in India, then Punjab NRI property help you to choose best property with the full documentation. We help you to understand the government working mechanism to make this process easier, there are hardly any obstacles in the way of making your dream home a reality.