Non-Resident Indians (NRIs) engaging in the sale of property in India are subject to specific taxation rules that demand careful consideration. The gains consequent from the sale of property, known as capital gains, are taxable in India. The tax consequences vary based on factors such as the holding period, type of property, and the capital gain's nature – whether short-term or long-term.
For short-term capital gains (property held for less than 24 months), NRIs are taxed at applicable slab rates. Long-term capital gains (property held for 24 months or more) attract a flat rate, with the option of indexation to account for inflation. The taxation process contains calculating the sale proceeds, deducting allowable expenses, and applying the relevant tax rate.
Exemptions are available under Section 54 and Section 54EC of the Income Tax Act. These provisions provide relief from capital gains tax when the sale proceeds are reinvested in another property or some other investments.
Looking for professional guidance from NRI tax consultants can help directing the complexities of property transactions, ensuring optimal tax planning and compliance with Indian tax laws. You can reach us for all such compliances.
Non-Resident Indians (NRIs) earning rental income from properties in India are subject to specific tax regulations. Rental income is considered taxable under the head "Income from House Property" in India. NRIs are required to calculate their taxable rental income by deducting permissible expenses, such as property taxes and standard deductions, from the gross rental income and need to pay income tax if come under tax slab.
The applicable tax rates for NRI rental income depend on whether the property is self-occupied, let-out, or deemed to be let-out. NRIs must also consider the TDS (Tax Deducted at Source) obligations on rental payments made to them. The tenant is typically responsible for deducting TDS before remitting the rent to the NRI landlord.
NRI landlords can take advantage of available exemptions and deductions under the Income Tax Act. For example, a standard deduction of 30% is allowed on the net rental income to account for repairs and maintenance expenses. Additionally, NRIs may claim a deduction for the interest paid on loans taken.
Fixed Deposits (FDs) in India are a popular investment avenue, but Non-Resident Indians (NRIs) need to be mindful of the tax implications associated with them. Interest earned on NRI Fixed Deposits is taxable in India. So the interest will be taxable as per tax slab.
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