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Tax Implications for NRIs

Non-resident Indians are one of the major investors in the Indian real estate market. With an expectation of gaining a high return on investment, NRIs invest their hard-earned money to convert it into a lucrative source of income. It is well-known that on selling any kind of property, NRIs are taxed in India based on capital gains. However, you will be amazed to know that you can save tax on capital gains under different sections of the Indian Income Tax Act. Visit, https://www.jllhomes.co.in/news/2022/09/08/tax-implications-nris

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Tax Implications for NRIs

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  1. Tax Implications for NRIs

  2. There are many instances where NRIs desire to sell their inherited property or property of their own bought for self-occupancy or for renting out. They must remember that when property bought in India is sold, it is taxable to Indians and NRIs on capital gains. The capital gain is the profit earned against the value of the purchase by selling the property, which is categorised into two: short-term capital gain and long-term capital gain. NRI capital gains taxation in India

  3. Exemption under section 54 Ways to save tax on capital gains The exemption under section 54 is available only on long-term capital gains from the sale of residential property. There are high chances that the new house would have cost more than the amount of capital gain made from the sale, therefore, the exemption is limited to the total capital gain on the sale.

  4. Exemption under section 54F Ways to save tax on capital gains This section refers to the long-term capital gains that are earned from the sale of capital assets other than residential property. Under section 54F, the NRI must purchase residential property within one year before the date of transfer or two years after the date of transfer. In three years from the transfer date of a capital asset, one may build or construct a house property instead of buying one. This new home must be located in India and cannot be sold for three years after being bought or built.

  5. Exemption under section 54 EC Instead of purchasing, building, or depositing capital gains in a bank, NRIs can invest in specific bonds issued by the National Highway Authority of India or Rural Electrification Corporation (REC) with a lock-in period of five years (three years before 2018) and should not be sold for five years (three years before 2018) from the date of sale of the residential property. Although the NRIs have six months to invest in these bonds, they must invest in them before filing the return to claim this exemption. Visit, JLLHomes for more details Ways to save tax on capital gains

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