I am an NRI, want to sell ancestral property in India. Income tax rule explained

I am an NRI having Indian passport. I want to sell my ancestors property in India. The property was bought in 1961. Now it’s owned by me through authorized heirship. I want to sell the property now. Will there be any legal responsibility? Can I declare indexation? Is TDS relevant in such case? If sure, what proportion?

Whether you’re an NRI or an Indian resident, the tax provisions on the market of inherited property are the identical. Since the property was acquired in 1961, any revenue made on sale of it is going to be taxed as long run capital features. For the aim of computing capital features, you’ll have to take the truthful market worth of the property as on 1st April 2001 as your price. You want to receive a valuation report for truthful market worth of the property as on 1st April 2001 from a registered valuer.

The truthful market worth can’t be increased than the stamp obligation valuation of the property at that date. Such truthful market worth of the property is to be listed with Cost inflation index of the yr of sale. The web sale worth after deducting bills incidental to the sale and as lowered by listed price is your taxable long run capital features on which tax @ 20% (plus surcharge and cess) is payable. 

Yes, tax deduction will apply on this transaction. Since you’re a non-resident for tax functions, the customer is required to deduct tax at supply as per Section 195 @ 20% on taxable capital features regardless of the sale worth of the property. For the customer to accurately compute the taxable quantity of long run capital features, you’ll have to share the related paperwork like valuation certificates and bills incurred for the sale transaction. In case you would like the customer not to deduct tax at supply, you may method the jurisdictional earnings tax officer to concern you a certificates for non-deduction of tax at supply. 

You can save long run capital features in case your purchase a residential property inside specified interval and/or make investments the listed long run capital features in capital features bonds inside six months from sale of the property.

Balwant Jain is a tax and funding knowledgeable and will be reached on jainbalwant@gmail.com and @jainbalwant on Twitter

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