I’m an NRI, wish to promote ancestral property in India. Income tax rule defined

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

Whether you might be 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 will likely be taxed as long run capital good points. For the aim of computing capital good points, you’ll have to take the honest market worth of the property as on 1st April 2001 as your value. You have to receive a valuation report for honest market worth of the property as on 1st April 2001 from a registered valuer.

The honest market worth can’t be increased than the stamp responsibility valuation of the property at that date. Such honest 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 diminished by listed value is your taxable long run capital good points 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 good points regardless of the sale worth of the property. For the customer to appropriately compute the taxable quantity of long run capital good points, you’ll have to share the related paperwork like valuation certificates and bills incurred for the sale transaction. In case you want the customer to not deduct tax at supply, you may method the jurisdictional revenue tax officer to situation you a certificates for non-deduction of tax at supply. 

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

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

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