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What Are The Legal And Taxation Framework For NRIs?
To deal with the tax implications and to determine an NRI residential status, non-residential individuals typically follow two guidelines - taxation service by the Income Tax Act and the Foreign Exchange Management Act (FEMA).
FEMA For NRIs
The Foreign Exchange Management Act, of 1999 regulates the transactions of foreign exchange in India and fund repatriation for property selling by NRIs.
Income Tax Act
If you are a non-resident Indian trying to sell your property in India. Then, you are subjected to pay certain taxes like capital gains tax, 20% TCS, and TDS provisions.
Compliance And Challenges Faced By NRI While Selling Property In India
1. Legal Documentation
Legalities and documenting property details is a common challenge among many NRIs trying to sell their property in India. It may also include a lack of awareness for applying for a lower TDS certificate for immovable property in India.
For example, an NRI selling his residential property in India can use Form 13 if the gain is not that significant. However, 20% of TDS has to be deducted on a property sold by an NRI after 2 years and 30% prior to 2 years, Form 13 here intends to lower the burden.
2. Valuation Of Property
If you are an NRI residing outside India and you are trying to sell the property. Then, it can be a bit challenging for you to evaluate the actual market price of the real estate market in India when you are not physically present at the location.
In this case, consulting a reputed chartered accountant is the best decision you can take.
3. Property Title Disputes
Encoarchemnets in property titles of a property is common in India, especially for NRIs. It can happen due to illegal possession, inheritance disputes, and not repaying dues.
But, being an NRI, you are facing similar issues with the power of attorney of your property in India. Then, there are several legal remedies that you can seek relief from.
4. Management Of Property
Managing your property in India remotely from abroad can be a daunting task. Which can lead to property deterioration, maintenance, and disputes among tenants residing in your property.
5. Fluctuations In Property Rates
If you have decided the timing and procedure to sell your property in India being a non-resident Indian. Then, the biggest challenge you can face is market volatility which can bring uncertainty in the profitability of your property selling.
6. Difficulty In Networking
While, people residing in India can easily connect with people who seem interested in buying a property. But the same is difficult for a NRI due to the absence of a physical meeting.
Thus, for a seller, it is important to socially network and connect with people or to get help from relatives and friends residing in India.
7. Long Term And Short Term Capital Gains On Property Sale
If you are an NRI and willing to sell a property after buying it within 2 years then it comes under the tax implications of short-term capital gains. However, a property sold by an NRI in India after 2 years of buying it is termed a long-term capital gain.
Therefore, you need to pay 20% tax on LTCG if you are selling a property in India after 2 years of inheriting it.
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How DSRV India's Expert CA Team Can Help You?
With more than 35 years of experience, we at DSRV India excel in providing solutions to all the challenges faced by NRI while selling a property in India. So, if you are looking for a smooth property transaction then we can help you with the following -
- Conducting in-depth research on the legalities and due diligence. Ensuring that your property title is clear and has no legal compliance before selling.
- Providing researched and expert advice on tax liabilities and implications for NRIs selling an Indian property.
- Obtaining compulsory approvals and assisting with sale proceedings from regulatory authorities.
- Providing necessary support through documentation to transfer property for end-to-end transactions of the sale of the property.
Thus, maximize your property selling benefits in India with our innovative and optimized approach for NRI selling property in India.
Navigate Through The Real Story Of An NRI Selling Property In India
Once, we had a client named Vikash, who is residing in the United States but is an Indian by origin and birth. However, he inherited his ancestral property from his grandparents in Mumbai, which he decided to sell. But, faced a lot of challenges that are common among NRIs intending to sell properties in India.
From dealing with tax implications to finding the right networking source, he was facing hurdles that brought him to us. Thus, after hearing Vikash's story, our CA experts in DSRV India, a leading and reputed chartered accountant firm decided to help him. With our expertise in property transactions and NRI taxation, Vikash sold his property successfully in India at a good market price while ensuring legal compliance and maximum benefits.
