NRI Property Selling
Investment in Indian Real Estate is considered one of the lucrative opportunities & as a reason, the Indian Real Estate market has always attracted investments from its diaspora residing abroad. NRIs have also significantly contributed to the Indian Real Estate market by purchasing residential and commercial properties.
While (NRI Property Buying) is an attractive proposition among the Indians settled abroad selling these assets is not that straightforward. It calls for deep understanding & thorough planning on the part of the NRIs especially regarding tax implications. Therefore, NRI sellers need to understand these complexities and also be updated to ensure full compliance & get a good profit.
Given below are the points NRIs should consider while selling property in India:
1) Eligibility & Documents required – If you are an NRI you can sell any immovable property in India except the agricultural land, plantation property, or farmhouse to a resident of India or to another NRI. Documents required are a sale deed, title deed, power of attorney (if applicable), residence proof, property tax receipts, and other relevant documents.
2) Taxation Rules for NRIs- For NRIs selling property in India it’s extremely important to know about the various taxation rules. NRIs have to pay taxes on the capital gains made from selling the property. Short-Term Capital Gain (STCG) tax rates are applicable if the property is sold by an NRI within two years of its date of purchase and is estimated as per income tax slab rates of the NRI. If the property is sold after two years Long- Long-Term Capital Gain (LTCG) tax at the rate of 20% is applicable.
3) TDS Rates – For Indians, a 1% TDS rate is levied during the sale of property. In the case of NRIs, 20% LTCG TDS rates are applicable if a property is sold after two years & 30% LTCG TDS rates are applicable if a property is sold within two years. Additionally, there is a surcharge along with education and health cess that varies depending on the sale value of the property.
4) Operational PAN – A Permanent Account Number (PAN) is a must for all big-ticket real estate transactions within the country. For selling the property, NRI must get an operative PAN as an operative PAN is needed to apply for a Lower TDS certificate. Hence, all NRIs need to make sure they have an operative PAN in order to avail tax return benefits.
5) NRO (Non-Resident Ordinary Account) – If you are an NRI wanting to sell your property in India, then you will need to open an NRO account in order to receive the proceeds of the sale. To transfer the money from your NRO account to your home country you will need a Certificate of Tax Compliance (Form 15CA/15CB) which you can get from a Chartered Accountant.
While the Indian Real Estate market offers excellent returns on investment it is important that the NRIs stay updated about the latest tax rules & property market trends. The value of the property, the state where the property is located, the holding period, and reinvestment play a crucial role in NRI property selling. So it is important to seek professional advice from a reputed consultant in this matter to make sure that your property transactions in India are profitable and as per the regulations.