Useful Tax Advice on Capital Gains for NRIs in India

There are strategies to reduce capital gain tax and qualify for deductions if you're a non-resident Indian (NRI) living and working outside of India and planning to sell a house, equity, or bonds that you might own in India. You can use all of the updates provided in this post that have been put together by a leading NRI tax consultancy in Kolkata. 

If you are an NRI with any sort of capital gains in India, then you are in line to experience a double-time tax. One would be to pay for foreign income in the country you are currently living and working in, and the other would be to pay income tax to the Indian government for earning any interest, renting out your property, or any business dealings. As a result, any such NRI would appreciate a tax break and any provision that could save them money.

Exemptions Under Section 54 For Capital Gains From House or Property Sale in India

 A CA firm in Kolkata works with NRI taxation and points out how so many NRIs have houses or land in India that are vacant or that they cannot afford to renovate to rent out. The good news is that NRIs can now claim tax exemptions under the norms specified in Section 54 of the Income Tax Act of 1961. NRIs are only required to invest the amount of the capital gains and not the total selling receipt. If you purchase a new home, the cost of the new property may be higher than the proceeds from capital gains. The tax break, however, will only cover the total capital gain on the sale. 

Exemptions Under Section 54F For Capital Gains From Assets Other Than Real Estate

 Section 54F of the Income Tax Act of 1961 exempts long-term capital gains on the sale of capital assets other than houses or real estate property from taxation. This section is reserved for other assets like gold jewellery, stocks, bonds, and the like. The returns from the sale of the capital asset would be allowed as an exemption, but the exemption would only be valid when the capital gain is reinvested toward the acquisition or building of a residential property. The sale receipt of the investment is necessary for the Section 54F exemption. The capital gains are totally exempt if the entire selling receipt is invested; otherwise, a partial exemption is permitted. 

How The Section 80C Works for NRIs

The Income Tax Act of 1961 enables several other exclusions and deductions in addition to the exemption allowed by Section 54F. One of them is Section 80c, which gives NRIs the ability to claim deductions on property taxes, claim a standard deduction of 30%, and take advantage of a home loan interest deduction and the deduction for principal repayment. If you paid stamp duty and registration costs when you purchased a property, you may also be able to deduct them under Section 80C. You can also qualify if you pay your insurance premiums, home loan principal, etc. By making investments in Section 80C avenues, you can take a combined deduction of up to INR 1.5 lakhs.