CAPITAL GAIN ON IMMOVABLE PROPERTY FOR NRI AND REPATRIATION OF PROCEEDS FROM SALE OF PROPERTY IN INDIA

Who is an NRI?

Non-Resident Indian is a person who is not a resident of India. An individual is deemed to be a resident, if

• (A)Individual has resided in India in that year for 182 days or more or
• (B) Having within the 4 years preceding that year been in India for 365 days or more and is in India for 60 days or more in that year.
• w.e.f. A.Y.2021-22 has amended with 120 days, if an Indian citizen or a person of Indian origin whose Total Income, other than Income from Foreign Sources, exceeds ₹ 15 lakh during the previous year.

Which section defines meaning of immovable property?

Section 2 (6) of The Registration Act, 1908 states that it includes

• Land
• Building
• inherited allowances
• rights to ways etc & any other advantages to arise out of the land, and things attached to the earth

When the capital gain arises? And its nature?

The rate of Surcharge is 15% for LTCG ,112 and 111A.

Applicability of TDS on sale of immovable property:

When an NRI sells property

TDS is required to be deducted if stamp duty value property exceeds 50lakhs.

The buyer is liable to deduct the tds @20%.

• If income of Rs. 50 lakh – 1Crore surcharge@10%, if Rs.1Crore-5Crores Surcharge@15%,5crore-10crore @37%.

How can NRI avoid TDS on property sale?

NRI is required to file an application in Form 13 with the Income Tax Department (under section 197) for issuance of Certificate for Nil/ Lower Deduction of TDS.

Procedure for obtaining certificate:

• Income Tax Login Details of NRI/Foreign Citizen. If not created then need to be created (incometaxindiaefiling.gov.in)
• Registration on the Lower TDS Application Portal i.e. TRACES (For Filing Form 13 online)
• Agreement To Sell With Buyer (For Sale of Property)
• TDS Account Number (TAN) & TAN Letter of Property Buyer. Buyer can apply it and get in 2-3 days by filing Form 49B with Income Tax Department.
• Copy of Passport of NRI/Foreign Citizen Seller (along with latest few years internal pages)
• Circle Value of property being sold (documentary evidence or website reference)
• Property Acquisition & Purchase related documents (i.e. Sale Deed, Agreement with Builder, Allotment Letter, Possession Letter, Receipts etc; whichever exist)
• Indian Bank Account statements for latest 18-24 months
• Income Tax Return Copy (if ITR is filed) for latest 2-3 years
• Tax Record - 26AS latest 2-3 years

Repartriation of sale proceeds:

Repatriation refers to the transfer of Indian Rupees from your Non-Resident Ordinary (NRO) Rupee Checking Account or NRO Deposit either in foreign currency to your overseas account or FCNR Deposit, or in Indian Rupees to your Non-Resident External (NRE) Rupee Checking Account.

When repatriation is possible?

Only when the property is hold for 10years and can to restricted to 2 residential properties.

What are documents required for repatriation?

All the above documents are needed to be submitted at the bank branch(in india).you can either submit it when you arrive here or download it online and send signed copies to bank branch via courier.

What are the provisions need to be complied with respect to repatriation?

• Compliance with the provisions of foreign exchange law
• Or the provisions of FEMA regulations is mandatory

Limits on repatriation amount:

• If property is bought using funds from your Non-Resident External (NRE) Account, then you can repatriate funds overseas from your NRE account up to the amount original purchase amount.
• If property is bought using the funds from your Non-Resident Ordinary (NRO) account, or a resident rupee account the maximum amount eligible to repatriate is of 1 million dollar per financial year
• In the case of a residential property, repatriation of sale proceeds is restricted to less than or equal to two properties.

Can a non-resident claim exemption from the payment of capital gain tax?

Yes, a non-resident like his resident counterpart, can claim exemption as given below:

Note: in all the above cases the residential house needs to be held or 3years after the purchase/construction, else the capital gain exemption is withdrawn.