Anon-resident Indian (NRI) means a person who is not resident in India. Under the Foreign Exchange Management Act, 'a person resident in...
Anon-resident Indian (NRI) means a person who is not resident in India. Under the Foreign Exchange Management Act, 'a person resident in India' includes a person residing in India for more than 182 days during the course of the preceding financial year, but does not include a person who has gone out of India or who stays outside India for employment or business. It also does not include a person who has come to or stays in India, for employment or business. All other persons are NRIs.
NRI's can substantially reduce their tax liability and even get upto 100 percent income tax benefits under the Income Tax Act by buying and selling property with proper tax planning. There is a wide scope of exemptions under the Income Tax Act for NRI investors. The acquisition and transfer of immovable property by NRIs should be in accordance with Foreign Exchange Management Act.
The property should be purchased through a registered conveyance deed. The property may also be purchased on a power of attorney. In the latter case an agreement to sell and a power of attorney are executed by the seller in favour of the buyer. However, it is not formally registered with the office of registrar. As such, no stamp duty is to be paid for the purchase. However, this mode should be avoided because of the inherent pitfalls.
In case a NRI sells a house, he can get upto 100 percent tax exemption on the longterm capital gains. He should have held the property for more than three years before the date of transfer. Further, he can also get the benefit of indexation of costs for computation of capital gains.
NRIs should own only one house or a part of a house. The house may be in the form of an independent house, an apartment or a flat in a society. The house may be meant for self-occupation or for the occupation of the family members of the NRI. If the house is self-occupied, no deduction is allowed on the municipal taxes paid by him. However, deduction under Section 24 of the Income Tax act is available. This deduction is on the interest paid on housing loans. The maximum amount eligible is Rs 1.5 lakhs. As there is no income earned from such a self-occupied house, the maximum deduction permissible is limited to Rs 1.5 lakhs per annum. In case a NRI owns more than one house, only one of the houses would be exempt from tax. Deemed rental incomes of other houses would be taxable.
A NRI may acquire a house only to let it out. The property may be commercial or residential. He would be liable to income tax on the net rental income from the house. In case there is any loss under the head 'house property', it can be set-off against other incomes during the same previous year. In case there is still some loss which cannot be set-off, it may be carried forward to be set-off against 'income from house property' in the subsequent years.
Courtesy:TimesofIndia
NRI's can substantially reduce their tax liability and even get upto 100 percent income tax benefits under the Income Tax Act by buying and selling property with proper tax planning. There is a wide scope of exemptions under the Income Tax Act for NRI investors. The acquisition and transfer of immovable property by NRIs should be in accordance with Foreign Exchange Management Act.
The property should be purchased through a registered conveyance deed. The property may also be purchased on a power of attorney. In the latter case an agreement to sell and a power of attorney are executed by the seller in favour of the buyer. However, it is not formally registered with the office of registrar. As such, no stamp duty is to be paid for the purchase. However, this mode should be avoided because of the inherent pitfalls.
In case a NRI sells a house, he can get upto 100 percent tax exemption on the longterm capital gains. He should have held the property for more than three years before the date of transfer. Further, he can also get the benefit of indexation of costs for computation of capital gains.
NRIs should own only one house or a part of a house. The house may be in the form of an independent house, an apartment or a flat in a society. The house may be meant for self-occupation or for the occupation of the family members of the NRI. If the house is self-occupied, no deduction is allowed on the municipal taxes paid by him. However, deduction under Section 24 of the Income Tax act is available. This deduction is on the interest paid on housing loans. The maximum amount eligible is Rs 1.5 lakhs. As there is no income earned from such a self-occupied house, the maximum deduction permissible is limited to Rs 1.5 lakhs per annum. In case a NRI owns more than one house, only one of the houses would be exempt from tax. Deemed rental incomes of other houses would be taxable.
A NRI may acquire a house only to let it out. The property may be commercial or residential. He would be liable to income tax on the net rental income from the house. In case there is any loss under the head 'house property', it can be set-off against other incomes during the same previous year. In case there is still some loss which cannot be set-off, it may be carried forward to be set-off against 'income from house property' in the subsequent years.
Courtesy:TimesofIndia
