When it comes to real estate transactions in India, Non-Resident Indians (NRIs) contribute to a significant portion of buyer percentage. However, even after contributing a considerable portion, they still go through a lot of difficulty in the taxation process while buying or selling properties.
What a lot of NRIs may not know is that sale of the property will give the rise of short-term or long-term capital gains, which will be taxed as per the income tax rates. Like any other residents of India, NRI taxpayers are also eligible for indexation benefit in case of long-term capital gains. This will result in reducing the number of long-term gains, thus reducing tax liabilities on the same. NRIs can similarly claim a deduction on various expenses like travel expenses, brokerage fees, etc. while calculating the amount of long term gain.
The taxpayer can reinvest in another property in India and then claim exemption from long-term capital gains. Taxpayers can alternatively invest in long-term capital gains tax saving bonds and claim exemption on the same. These investments must, however, be made within six months of the date of the property. As a non-resident of India, the taxpayer may suffer a TDS of around 23 percent on the transaction value. Taxpayers can make an application with the IT department for a lower or nil TDS rate.
Source : Economic Times