The process of reinvesting capital gains to save taxes when selling a property in India as a non-resident Indian.
Firstly, it is important to note that as an NRI, the tax rate on the sale of the property is approximately 23% of the complete sale value, not just the profit part. However, if you understand that your actual tax rate is less than 23% or you are selling the property at a loss, you can apply for a lower TDS or nil TDS certificate to avoid paying the 23%.
Hate reading, Watch the video
It is not possible to make a declaration before selling the property that you are going to reinvest the capital gains to avoid paying lower TDS. The process of lower TDS deduction is different from the process of reinvesting capital gains to save taxes. The government ensures that the NRI pays the tax before leaving the country with the money by deducting lower TDS.
Once you sell the property and either pays the 23% deduction or get a lower TDS deduction, you can then reinvest the capital gains to save taxes. You can invest in infrastructure bonds or buy another property with the money. However, you cannot mix the provision of lower TDS with the investment of capital gain. One can invest the capital gains only after the sale has happened.
Consult CA Arun Tiwari for more info 📞 8080088288 or cs@aktassociates.com
After selling the property and reinvesting the capital gains, you can claim a refund of the taxes paid while filing your return. It is important to follow the correct process of lower TDS deduction and reinvestment of capital gains to save taxes when selling a property in India as an NRI.
Summary
As an NRI selling a property in India, the tax rate is approximately 23% of the complete sale value. However, if the actual tax rate is less than 23% or the property is sold at a loss, a lower or nil TDS certificate can be applied for. Reinvesting capital gains to save taxes is a separate process that can be done after the sale, by investing in infrastructure bonds or buying another property. It is important to follow the correct process of lower TDS deduction and reinvestment of capital gains to claim a refund of the taxes paid while filing the return.