Tax on sale of house in India by a Indian Citizen currently in US

Hi,

Hope you are doing well !

NRIs who are selling house property which is situated in India have to pay tax on the Capital Gains.

Sale proceeds needs to be deposited in NRO account.

For deduction of tax at source by the Buyer and opening NRO Bank account he needs Permanent Account Number (PAN) which is Income Tax Id number in India..

Foreign Exchange Management Act, 1999 (FEMA) provisions require purchase price to be paid in India only.

As such the Buyer cannot pay any amount in USA.

Long term capital gains are taxed at 20% plus applicable surcharge and Cess.

NRIs are allowed to claim exemptions under section 54,, 54F and Section 54EC on long term capital gains from sale of house property in India.

Thanks & Regards,

Payal Chhajed

Please sell the property only after 3 years from the date of registration, i.e., Oct 18. Though possession was handed over to him in Oct 2016, he acquired the ownership rights by virtue of registration in October 2015 itself and most likely he would have paid entire sale consideration. If the property is sold before Oct 18, it will be short term capital gains and taxed at normal rates.

Assuming that he is selling the flat after 3 years, the cost of acquisition in 2015 can be indexed. Thus the purchase value of Rs 24 Lakhs is equivalent to Rs. 26.45 lakhs. His Long term capital gains (LTCG) will be Rs 18.55 lakhs. His tax liability will be Rs 3.82 Lakhs i.e., 20.6% of the LTCG.

He can save this tax if he invests the LTCG, i.e., Rs 18.55 Lakhs in acquiring another residential house u/s 54 or buying LTCG bonds u/s 54EC.

The buyer of the property needs to deduct tax at source @ 20.6%, as the seller is a non resident.

The seller an execute the sale through General Power of Attorney duly executed and notarized .

Hi,

It will be a long term capital gain since the property is held for more than 2 years. The capital gain will be approx. 18.5 lacs and tax @20.8% will be payable on the 18.5 lacs.

Your friend can save entire capital gain tax if he invest 18.5 lacs in buying another residential property or NHAI/ REC bonds within specified time.

Yes, he can sale flat by executing power of attorney.

Hi

The gains are Long Term Capital Gains. Capital gain comes to around 18.5 lacs post indexation of cost of acquisition.

Capital gain shall be chargeable @ 20.8%.

For claiming capital gain exemption, he can either purchase/ construct a new residential house property within 2/3 years of transfer OR purchase 54EC specified bond within 6 months of transfer.

Investment amount for claiming full capital exemption would be the capital gain amount.

If he is claiming the exemption, obtain a No deduction certificate from the Assessing officer so that the buyer does not deducts any TDS and the is no unnecessary blockage of funds.

Yes, property can be registered through power of attorney.

Dear Sir,

1) It is better and safe to have his presence for transfer of the property to avoid dispute and fraud.

2) If there is a capital gain on the sale then buyer needs to deduct TDS @20% plus surcharge and cess assuming he is non-resident in India in the year of sale. If he plans to reinvest in India to claim exemption and save tax then he can apply for NIL or lower deduction of tax certificate from his jurisdictional authority.

Thanks

Hi,

Your friend will be liable to long term capital gain. The capital gains will be taxed @20.8%.

He can save the capital gain tax by investing the capital gains in buying another residential property or NHAI/ REC bonds within specified time.

He can sell the flat by executing power of attorney however it is advisable that he be present at the time of sale.

Regards,

Nikhil.

Transaction will come under long term capital gain and it will come to aprox 18.5 lacs. Tax payable on this will be @ 20.% plus cess@ 3%.

To minimize the tax liability ,Investment in residential property or in specified bonds can be done.

It can be done through power of attorney.