• NRI - Property sold and then another property purchased


I am an NRI based in UK.
In the year 2013-14, I sold one property in Bhopal and reinvested the whole money to buy another property at Pune.

I didn't file any income tax return.

I have received a letter now from ITD with subject : Non Filing of Income tax Return.

This letter requires me to furnish my response within 20 days electronically in the Compliance Module on the e-filing portal.

There are three items in the Information summary :-

 1. TDS Return - payment to Non-residents (Section 195). (TDS-195)
 2. Purchased immovable property valued at Rs. 30 lacs or more. (AIR-006)
3. Sold immovable property valued at Rs. 30 lacs or more. (AIR-007)

Could you please advise what option would be a best fit to select in the response for all the above three items. I am confused between "Self-investment/expenditure is out of accumulated savings" or "Self-investment/expenditure is out of foreign income".

Please help by giving your advice.
Asked 2 years ago in Income Tax from Bhopal, Madhya Pradesh
If you are a non resident, tax at source would have been deducted u/s 195 by your buyer out of sale proceeds and this TDS would have been reflected in your 26AS, the statement in which your tax details and high value (AIR) transactions are recorded. As you did not file IT return, you would have not offered the capital gains, as a result of which you would have received the notice. It is possible that your actual tax liability would have been less than the TDS and you might have been entitled to refund also. 

If the property was sold in the financial year 2013-14, you can now file belated return latest by this month end, after which you will not be able to file return voluntarily. You can compute your long term capital gains and file returns latest by this month end.

Once you file the return, you can then proceed to respond to the notice in the efiling portal itself. As you purchased property out of sale proceeds, you can mention that the property was purchased out of sale proceeds of an existing property.
B Vijaya Kumar
CA, Hyderabad
845 Answers
48 Consultations

5.0 on 5.0

Sir in the present case you need to file Return of income . You need to declare the capital gains liability and claim exemption for investment in another property.

You can select 2 options if available i.e. sale of immo property and purchase of immov property.
Shyam Sunder Modani
CA, Hyderabad
1408 Answers
95 Consultations

5.0 on 5.0

In case of of non residents, any person responsible for paying any taxable amount to a non-resident is required to deduct TDS. If he has not deducted the same, it is your responsibility to file Return of Income at the end of the year before the due date. You need to calculate the amount of capital gain taxes and offer it to tax after considering exemption under section 54.

However, considering the fact that you have re-invested entire amount in  another residential property, your tax liability will be NIL. But you should file the belated return now. The last date of filing the belated return in your case is 31 March 2016. Before that you have to obtain PAN.

Please contact in case you require any help.
Abhishek Dugar
CA, Mumbai
2936 Answers
123 Consultations

5.0 on 5.0

In my opinion you should select "Self-investment/expenditure is out of accumulated savings" as the you have bought new property out of your accumulated saving (i.e. existing property).

Do not need to worry its just a formal inquiry.
Praveen Maheshwari
CA, Ahmedabad
4 Answers

4.5 on 5.0

Dear Sir,

It appears that you have received a query/ inquiry because the person to whom you might have sold your property may have deducted TDS on it and as you have not filed your returns, you have received this notice.

First thing, which you should do now is to get your returns filed before 31st March 2016 as that is the Last day to file your returns for the FY 2013-14.

Secondly after filing your returns, Select Option 2 & Option 3 & preferably select Accumulated Savings as I assume you have bought the Pune Property out of the Sale proceeds of the Bhopal Property.

I would advise you to hire a professional to file your return as it is you have received an inquiry notice so you cannot afford committing a mistake while filing your returns.

Trust this clarifies your query.

Feel Free to get back/ call for further clarifications.

Thanking You.

CA Rohit R Sharma
Rohit R Sharma
CA, Mumbai
2104 Answers
91 Consultations

5.0 on 5.0

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