Tax Implications for Non-Resident Indians (NRIs) Selling Property in India: NRI Legal Services in Delhi NCR
NRIs can avail tax exemption under Section 54, 54F and 54EC of Income Tac Act.
Exemption under Section 54
The whole sum paid as LTCG tax could be claimed as refund under this Section, if the NRI invests an equal amount in purchase of another property. The point to be noted is only the profit made by the NRI have to be invested not the entire sale proceeds. Time span is 1 year before or 2 years post the sale of the previous property. NRIs are also allowed to invest in construction provided the construction work must be completed within 3 years. If the given time period is lapsed, then no exemption will be provided.
Exemption under Section 54F
NRI can exempt from tax on LTCG on any asset besides the residential property, by investing in a residential property in India provided that NRI should not sell it within 3 years of its purchase and that NRI shall not own more than 1 house property besides the new one and also nor should buy within a period of 2 years or construct within 3 years period any other residential house.
Exemption under Section 54EC
NRI can claim exemption LTCG by investing the amount in bonds of the National Highway Authority of India (NHAI) and Rural Electrification Corporation (REC), within the six months of the date of sale on condition that these bonds must not be sold before the 5 years from the time of sale of the property.
Exemption under Section 54
The whole sum paid as LTCG tax could be claimed as refund under this Section, if the NRI invests an equal amount in purchase of another property. The point to be noted is only the profit made by the NRI have to be invested not the entire sale proceeds. Time span is 1 year before or 2 years post the sale of the previous property. NRIs are also allowed to invest in construction provided the construction work must be completed within 3 years. If the given time period is lapsed, then no exemption will be provided.
Exemption under Section 54F
NRI can exempt from tax on LTCG on any asset besides the residential property, by investing in a residential property in India provided that NRI should not sell it within 3 years of its purchase and that NRI shall not own more than 1 house property besides the new one and also nor should buy within a period of 2 years or construct within 3 years period any other residential house.
Exemption under Section 54EC
NRI can claim exemption LTCG by investing the amount in bonds of the National Highway Authority of India (NHAI) and Rural Electrification Corporation (REC), within the six months of the date of sale on condition that these bonds must not be sold before the 5 years from the time of sale of the property.
Therefore, before buying or selling any property in India the NRI should always obtain online legal consultation from a reputed real estate attorney in India and should understand the tax structure and the tax compliances. Further, there are a lot of legal compliances for bringing in money within India and outside Indian and the same has to be duly fulfilled.
It is advisable if a NRI is selling property after the 2 years of its purchase, then must look into tax exemptions provisions provided under the Income Tax Act and accordingly can avail the tax exemption.
