If you are a NRI than you are qualified for certain assessment exceptions from your earnings created from different resources in India. That, obviously, incorporates property.
Well, the government of India, in Budget 2017-18, lessened the time of short term capital gains from 3 years to 2 years. That implies selling your property earlier than 2 years of purchase than at the rate of 30 percent your property will be liable for short-term investment gain.
But, when a property is sold after 2 years, it will be consider as long haul capital gain with an average rate of around 20 percent. There will be no divergence between these taxes for Indians or NRIs. In any case, NRIs are qualified for definite tax under the Income Tax (IT) Act. Let’s have a look about them.
If you spend your long-term capital gain by selling your property in buying one housing property in India, then under section 54 of the IT Act, you can claim exemption but this exemption is restricted to buy of only one residential property from the capital gains.
The sum invested into purchase such property might be upper than the investment, however the exemption is accessible just for long term capital gain. Likewise, you can guarantee this exemption on property bought before one year from the sale of the property. That implies that if you purchase a property in year 2017 and sell the second one in year 2018, while filing the IT return, the investments made out from the last can be adjusted with the previous one.
Moreover, if you make use of your investments in buying another housing property in next 2 years, you can likewise claim the exemption. But, this exemption is accessible for purchasing just 1 housing property in the country. Not only this but you can likewise claim for the construction of your property also but there is a clause in it that you need to complete its construction within 3 years.
Imagine a scenario where you can’t one more property for any specific reason. Now and again, NRIs don’t get the desirable property in the predetermined time of 2 years In this case; under the Capital Gains Account Scheme, you can put the amount of your profits in an Indian bank. Then, you are not liable to pay taxes.
Under this section, the exemption is available for long term profits from selling a property but not a residential one. But you need to buy a housing property in India for the utilization of the long term profits from a property in order to claim exemption.
Not only this, but now this property must be sell before 3 years to avail the exemption.
Section 54 EC
Other than putting long term profits in purchasing another housing property, likewise one can put resources into particular bonds that are government authorized. This incorporates securities issued by National Highway Authority of India (NHAI) and Rural Electrification Corporation (REC. Such bonds, which are authorized, can be reclaimed following 3 years of procurement.
So as to profit an exception, you need to purchase these bonds inside a half year. Additionally, the most extreme measure of interest in the bonds is settled at around Rs 50 lakh.
It would be ideal if you take note of that outside India the above tax exemptions are not available for buying the assets.