Capital gains tax from property sale for us citizen vs India citi

Capital gain liability shall depend on the holding period of the property. When was the property purchased?

The tax rates for capital gain taxes remain the same for residents and non residents.

Citizenship is irrelevant under income tax law in India. Only residential status is relevant. Whether your mother is resident or NRI in India, Capital gain tax calculation remains the same.

For exemption in case of sale of land you can reinvest in bonds upto Rs.50 lacs or in new residential house property.

No , it will not differ. She will still get exemption, if she buys house in India.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Again the length of stay is irrelvant.

For exemption of long term capital gains, you can either reinvest the sale proceeds into a residential house property in India or buy 54EC bonds which shall be redeemable after 5 years.

Hi,

Citizenship will not affect the capital gains tax computation. Capital gains is dependent on the residential status of a person.

If there is a LTCG, tax can be saved by reinvesting in either residential houspe property or in specified bonds.

You can connect in case of any further clarifications.

Regards,

Nikhil.

Hi,

in case your mother sells a land under NRI status,then buyer is liable to deduct TDS @ 20%. In case the property has been sold before 2 years(reduced from the date of purchase) a TDS of 30% shall be applicable. TDS of 1% u/s 194IA is not applicable if seller is NRI. TDS u/s 194IA is only applicable for resident Indian sellers.

NRI can also apply for Lower TDS certificate or NIL TDS certificate-

1) where Capital Gain is Zero or there is Capital Loss on Property Sale

2) in case you are willing to pay Actual Capital Gain Tax i.e. if Actual Capital Gain Tax liability is less than TDS u/s 195: In this scenario, based on capital gain tax calculation you can apply for Lower tax Deduction Certificate.

You can claim TDS refund if can show proof of reinvestment of capital gains in India. You can either buy another house in India or invest in capital gains bonds u/c 54EC. You should submit an affidavit stating that you will invest the capital gain amount in capital gain bonds. For property purchase you can produce allotment letter or payment receipts.

In Case your Mother still a Indian resident at the time of selling the property, TDS of 1% will be deducted at the time of selling the property.

Capital gain saving scheme on selling the land is same in case of NRI or Indian resident

1) To claim the exemption, you can invest the proceeds derived from the sale of the land into another residential house either within two years from the date of the sale or one year prior to sale, or one must invest in the construction of a new house within three years of the sale. if all conditions are satisfied.

2) as mentioned above- Capital gains from sale of any long-term asset can be claimed as tax-exempt under Section 54EC of the Income-Tax Act by investing in notified bonds within six months of the transfer of Asset.

These bonds are issued by the Rural Electrification Corporation and the National Highways Authority of India.

The exemption is equal to the investment or the capital gain, whichever is lower. If you transfer or take a loan against these bonds within three years, the capital gain will become taxable.

These are redeemable after 5 years and must not be sold before the lapse of 5 years from the date of sale of the house property.

You are allowed a period of 6 months to invest in these bonds, but before the Income Tax Return filing date (to claim this exemption).

You can invest a maximum of Rs 50 lakh during a financial year in these bonds as per Budget 2015-16.

Long-term capital gain can be calculated =

Full value consideration Less expenses incurred exclusively for such transfer Less indexed cost of acquisition Less indexed cost of improvement Less expenses that can be deducted from full value for consideration* (*Expenses from sale proceeds from a capital asset, that wholly and directly relate to the sale or transfer of the capital asset are allowed to be deducted. These are the expenses which are necessary for the transfer to take place.)

Hi,

If the immovable property is situated in India, the tax treatment will be same irrespective of her presence in any of the countries for any number of days.

Her residential status will not impact the tax liability with respect to sale transaction of house property or land in India.

thanks

Damini

Hello,

Yes, it will. As she will not be a resident in India. But if in case, she satisfies the residential criteria and is a resident in India then she will be taxed the same way Indian Residents are.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, FCA, LLB, CERT. FAFP