Income tax on NRI who sell property in India
Capital Gains Tax applies if Non-Residents sell any House Property in India. The Tax is payable on gains depending on whether it is Long Term Capital Gains or Short Term Capital Gains. Period of Holding House Property Capital Gains Tax Rate More than 2 years from the date it is owned Long Term Capital Gains 20% Less than or equal to 2 years from the date it is owned Short Term Capital Gains Applicable Income Tax Slab Rates for NRI Important Note: If the property is inherited date of purchase of the previous owner shall be considered for calculating the Period of Holding. Also, Cost of previous owner shall be considered for calculating Capital Gains.
Important Note: If the property is inherited date of purchase of the previous owner shall be considered for calculating the Period of Holding. Also, Cost of previous owner shall be considered for calculating Capital Gains.
Tax Deduction at Source (TDS) Applicability TDS shall be deducted and deposited to Government by the buyer of property at the rate of 20% for Long Term Capital Gains. Surcharge and Cess shall also be levied.
Effective rate of TDS for Long Term Capital Gains shall be as follows :-
Sales Value of Property Less than 50 Lakhs – 20.80%
50 Lakhs to 1 crore – 22.88%
More than 1 Crore TDS Rates (including Surcharge & Cess) 23.92%
For Short Term Capital gains, TDS shall be deducted and deposited to the Government by the buyer of the property at Income Tax Slab rates of the Seller. Surcharge and Cess shall also be levied on the applicable Tax rate in the same manner as explained in the table for Long Term Capital Gains. TDS on purchase of Property from NRI is required to be deducted irrespective of the Transaction Value of the Property. Even if the value of the property is less than Rs. 50 Lakhs – this TDS is required to be deducted. The buyer should have a TAN No for deduction of TDS. TAN No is not required in case the property is purchased from a Resident Indian but it is mandatory in case the property is purchased from a Non Resident Indian.
Important Note :- The seller can file an application in Form 13 with the Income Tax Department and request them to compute his Capital Gains. The Income Tax Department will collect information from seller and will compute the Capital Gains of the seller and will issue a certificate for Nil/ Lower deduction of TDS depending on the capital gains arising on the sale of property. The seller is required to give this certificate to the buyer and the buyer will deduct the TDS as per the rates mentioned in the income tax certificate.
How to save Capital Gains Tax? NRI can claim exemption under section 54 & 54EC on Long Term Capital Gains.
Section 54 – buy House property
Section 54EC – buy CG Bonds for 5 years
