Tax Exemptions Nris Can Avail In India
Oct 10, 2017 Legal Guidance
A non resident Indian or NRI can avail certain tax benefits from the income generated from the sources in India, including the real estate.
The Finance Minister of the country Mr. Arun Jaitely announced in this year’s budget that the short term capital gains term period has been reduced from three years to two years. In simple terms, if you sell the property within two years of its purchase then you will be liable for short term capital gains which are 30 percent. On the other hand, if the property is sold after two years of purchase then it will be considered as long term capital gain at the rate of 20 percent.
There is no difference of tax rates for the Indians and NRIs. However, the NRIs are eligible for certain tax benefits under the IT act over and above the exemptions available under section 80C.
Section 54:
An NRI can enjoy the tax benefit under this section if he/ she invest the long terms capital gains from the sale of a property and invests in another residential property in India. Though, the purchase is limited to the purchase of only one residential property from the capital gains. The amount invested to buy the property may be higher than the capital gains but it is only for the capital gains from the long term capital gains. The exemption can be claimed for the same if you have bought a new property one year before selling the old one. For example, if you have bought the property in 2016 and sold the old property with long term capital in 2017, you are still liable for the exemption.
You can also claim for the exemption if you buy the property after two years of getting the capital gains from selling the old property. This exemption is also available for only one residential property. You can invest in the under construction property but its construction must be complete in three years.
But what if you cannot find any property within two years? In this case, you may deposit the money in any India bank under the Capital gains account scheme and you won’t have to pay tax for the same.
Section 54F:
The exemption under this section is available from the long term capital gains from the sale of property other than the sale of residential property. To claim the exemption from this, you will have to buy a residential property utilizing the long term capital gains from the property. Also, the new residential property cannot be sold before three years of purchase.
Section 54EC:
Instead of investing the long term capital gains from the property, you can also invest the gains in the bonds issued by the government of India. These bonds include Rural Electrification Corporation (REC) and Nation Highway Authority of India (NHAI). These bonds can be redeemed after three years of purchase. In order to avail the exemption, you will have to buy the bonds within six months of selling the property in India. The maximum amounts that can be invested in these bonds are Rs 50 lacs.
The Finance Minister of the country Mr. Arun Jaitely announced in this year’s budget that the short term capital gains term period has been reduced from three years to two years. In simple terms, if you sell the property within two years of its purchase then you will be liable for short term capital gains which are 30 percent. On the other hand, if the property is sold after two years of purchase then it will be considered as long term capital gain at the rate of 20 percent.
There is no difference of tax rates for the Indians and NRIs. However, the NRIs are eligible for certain tax benefits under the IT act over and above the exemptions available under section 80C.
Section 54:
An NRI can enjoy the tax benefit under this section if he/ she invest the long terms capital gains from the sale of a property and invests in another residential property in India. Though, the purchase is limited to the purchase of only one residential property from the capital gains. The amount invested to buy the property may be higher than the capital gains but it is only for the capital gains from the long term capital gains. The exemption can be claimed for the same if you have bought a new property one year before selling the old one. For example, if you have bought the property in 2016 and sold the old property with long term capital in 2017, you are still liable for the exemption.
You can also claim for the exemption if you buy the property after two years of getting the capital gains from selling the old property. This exemption is also available for only one residential property. You can invest in the under construction property but its construction must be complete in three years.
But what if you cannot find any property within two years? In this case, you may deposit the money in any India bank under the Capital gains account scheme and you won’t have to pay tax for the same.
Section 54F:
The exemption under this section is available from the long term capital gains from the sale of property other than the sale of residential property. To claim the exemption from this, you will have to buy a residential property utilizing the long term capital gains from the property. Also, the new residential property cannot be sold before three years of purchase.
Section 54EC:
Instead of investing the long term capital gains from the property, you can also invest the gains in the bonds issued by the government of India. These bonds include Rural Electrification Corporation (REC) and Nation Highway Authority of India (NHAI). These bonds can be redeemed after three years of purchase. In order to avail the exemption, you will have to buy the bonds within six months of selling the property in India. The maximum amounts that can be invested in these bonds are Rs 50 lacs.
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