There are fair amount of deals now a days where Non Resident Indian often sell their inherited or buyed property in India .There is fair amount of confusion regarding capital gain aspects and Tax deducted at source on these transactions .
NRI who are selling their house property have to pay capital gain tax which can be long term or short term depending on the period of aquisition .If the property is sold after two year from the date of aquisition there is long term capital gain tax else its short term capital gain tax .
If the property is inherited then also tax implication are there ,period up to which owned by previous owner will be taken in consideration for calculating long term or short term capital gain .
To be more precise, the amount of long term capital gains together with the cost to the previous owner (i.e. the person from whom the property is inherited) would be considered as the cost of purchase. NRIs are subject to a Tax Deducted at Source (TDS) of 20 percent on the long term capital gains. But there are certain instances when NRI can get a waiver of the TDS.
NRI selling their properties can apply to the income tax authorities for a tax exemption certificate under section 195 of the Income Tax Act.
They must make this application in the same jurisdiction that their PAN belongs to and will be required to show proof of reinvestment of capital gains.
Long term capital gains are taxed at 20% and short term gains shall be taxed at the applicable income tax slab based on the total income which is taxable in India for the NRI.
TDS is applicable @20 % in case of long term capital gain and 30 % in case of short term capital gain and need to be deducted by the buyer of the property .
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