Taxation: Property sell by NRI

There is a fair amount of confusion about tax implication for NRIs who want to sell any house property that they may have in India. This article explores how much tax is payable and TDS deductible in case of NRIs who want to sell property in India.

NRIs who are selling house property which is situated in India have to pay tax on the Capital Gains. The tax that is payable on the gains depends on whether it’s a short term or a long term capital gain.

When a house property is sold, after a period of 2 years (Reduced from 3 years to 2 years in Budget 2017) from the date it was owned – there is a long term capital gain. In case it held for 2 years or less – there is a short term capital gain. Tax implications for NRIs are also applicable in the case of inheritance.

In case the property has been inherited, remember to consider the date of purchase of the original owner for calculating whether it’s a long term or a short term capital gain. In such a case the cost of the property shall be the cost to the previous owner.

How much tax is payable

Long term capital gains are taxed at 20% and short term gains shall be taxed at the applicable income tax slab rates for the NRI based on the total income which is taxable in India for the NRI.

TDS deductible

When an NRI sells property, the buyer is liable to deduct TDS @ 20%. In case the property has been sold before 2 years(reduced  from the date of purchase) a TDS of 30% shall be applicable.

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