Purchasing or Selling Property in India as an NRI: TDS, Repatriation and Compliance – GSCCA

For Non-Resident Indians, investing in real estate has always been popular as it is a long-term asset with an emotional attachment to the home country. But buying and selling property in India for a NRI involves tax implications, TDS requirements, FEMA rules (foreign exchange management) and stringent documentation. At GSCCA, we assist NRIs in manoeuvring through these hurdles and take informed, diligent and legal property decisions. Knowing what the rules are, regarding TDS, repatriation and compliance, will keep every real estate transaction transparent for all parties involved; tax-efficient and legally secure.

Understanding eligibility and rules for NRIs purchasing property

As per FEMA guidelines, NRIs can buy residential and commercial properties without any special permission in India. They can purchase as many of these properties as they like. However, the acquisition of agricultural land/ plantation property/ farm house in India continues to be governed by its foreign exchange regulations. Source of funding the purchase is through inward remittances or debit to NRE, NRO, FCNR account. Loan against house may be from the Indian banks / financial institutions! By understanding these basic rules, NRIs can plan and not get into any transactions that may come under the scanner in future under FEMA.

TDS Regulations When NRI Purchases Property in India

In case of an NRI buyer, the TDS obligation falls on the former if it is also an NRI selling a property. TDS needs to be deducted by the buyer before paying the seller. For LTCG assets held over two years, TDS applies at 20 per cent plus surcharge and cess. For short term assets, the TDS is deducted at income tax slab rates that is applicable. The purchaser would also have to get a TAN number for the purpose of your TDS and make payment of that TDS to the government. Failure to comply can mean fines and legal issues. GSCCA assists buyers determine accurate TDS and filing of necessary forms for making property transactions to be as per laws.

TDS Regulations on Sale of Property by NRI in India

TDS is one of the most significant aspects of a sale transaction for an NRI selling a property in India. The applicable rate is dependent on whether the asset is long-term or short-term, and TDS is to be deducted by the buyer. TDS on long-term capital gains is 20% and short term capital gains are taxed at applicable income tax slabs. For TDS, you can submit an application to the Income Tax Department and obtain a certificate from them allowing either lower or NIL deduction of tax at source if your actual tax liability is lower than the prescribed rate. This prevents over-withholding and makes it easier to repatriate later. GSCCA helps clients to avail lower TDS certificates as per the actual tax liabilities.

Calculating Capital Gains for NRIs

The cost of acquisition, expenses on improvement and indexation benefits are taken into account while computing capital gains. Indexation is available for long term capital gains, and that reduces the taxable gain a lot. NRIs are also still eligible for the exemptions under Section 54 or 54EC by investing in another house property or specified bonds. Option to plan Capital Gains: Proper planning of capital gains helps NRIs to lessen their tax liability or reinvest in the right way. GSCCA carefully consider clients’ documents, purchase history and reinvestment options to structure capital gains favourably.

Remittance of Sale Proceeds under FEMA 

Repatriation is the pertinent issue for NRIs selling property in India. FEMA guidelines permit NRIs to remit a maximum of USD 1 million per financial year from their NRO account, provided it is legitimate income earned in India. The money should be supported through adequate proof such as sale deeds, tax payments, TDS certificates and CA certificate in Form 15CB. An online Form 15CA also has to be submitted related to this. Repatriation limit may vary in case property is bought out of funds remitted from NRE/FCNR account and it is possible to repatriate full amount. GSCCA guarantees the accuracy and permissioning of all repatriation documents, ensuring that money flows freely without interference or questions from banks and governments.

Compliance and Documentation for NRIs

Real estate is one of those rare transactions that has very high requirements for the buyer and seller. NRIs need to have active identification, PAN cards and addresses as well as bank accounts in India. In property transactions, title due diligence, seller background checks and well-drafted agreements are key.” For sales, you must have proper TDS deductions, capital gain calculation and tax returns filing. Even rent income has to be declared and taxes paid to the tax authority. NRIs should also keep in mind property tax and municipality dues to save themselves any legal trouble. GSCCA assists clients in retaining proper documentation and filing all prescribed forms so that there are no consequences of late filings.

Importance of Professional Assistance

Taxation and compliance surrounding property can be complicated for NRIs, who may also not know about regular changes in regulation. Expert help makes sure taxes are minimized within legal framework, repatriation is hassle free and the entire transaction fulfills Income Tax as well as FEMA norms. 90% of the investment is available as loan from ILF&S/Equity Yardsticks/GSCCA providing one stop support ranging from evaluation of capital gains, producing CA Certificates and dealing with banks during repatriation. Through professional advise, NRIs can now deal with their Indian properties in India, in a confident and legal manner.

Conclusion

NRI’s buying or selling property in India should be familiar with TDS rules, capital gain tax, repatriation limits and FEMA regulation.. Accurate records and prompt fulfilment are a necessity when it comes to keeping good order and law in real estate. With expert assistance from GSCCA, NRIs can safeguard their investments and save themselves from tax tangles, while carrying out their financial transactions of India swiftly. During this time of change, it’s crucial to remain up to date and get expert advice if you want hassle free property management.