NRIs can reinvest gains from sale of flat in property,bonds to claim exemption (2024)

—Name withheld on request

The withholding tax rate for interest for non-resident Indians (NRIs) is 31.2% (30% plus 4% cess on it). However, there is no minimum threshold of interest income for tax deducted at source (TDS), which is deducted against a permanent account number (PAN). TDS should reflect in your Form 26AS, along with the interest income earned by you. This income must be reported in your income tax return to be filed in India. You can reduce TDS already deducted from the total tax calculated on your total income in India.

I have sold my house in India. Will the gains from the sale of the property be taxable in India. If yes, then how much?

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Capital gains from a sale of a property in India are usually always taxable in the country. This is also true for non-resident Indians who own a property in India. Gains from the sale of a property are considered short-term when the property is held for less than 24 months. However, if the property has been held for more than 24 months, they are considered as long-term capital gains (LTCG).

Short-term capital gains are taxable as per the slab rates, while LTCG is taxable at a rate of 20% after indexation. The buyer may also deduct TDS before making a payment to an NRI. An NRI is also allowed to claim an exemption on capital gains, where these gains are invested for purchasing or constructing a new house property.

An exemption can be claimed to the extent that such gains have been invested. The new property must be purchased either one year before or two years after the date of transfer. In case of a constructed property, it should be constructed within three years from the date of transfer. An NRI can also invest in capital gains bonds as per Section 54EC to claim an exemption on capital gains.

Archit Gupta is founder and chief executive officer, ClearTax. Queries and views at mintmoney@livemint.com