Possible tax saving options for NRI selling property in Bangalore

Here is a live case! I just finished a call with Mr.Amar, an NRI staying in USA. I understood from him that he has a flat in Koramangala, which was bought in 2011 for Rs.80 Lakhs which he now intends to sell for 1.52 Crores.

Our talk went as under –

Q: If I sell the property, should I pay any taxes in India?

A: Yes, you have held the flat for over 3 years and hence, you have to pay Long Term Capital Gain (LTCG) at the rate of 20.6%

Q: Oh! That seems to be a big tax outflow. I want this money in USA to buy a house. Can I get tax exemption for re-investment in a house?

A: No. However, if you buy a house or flat in India, you are eligible for tax benefit

Q: Apart from reinvesting in a house in India, is there any other tax saving options?

A: Yes; you can invest upto Rs.50 Lakhs in Capital Gain bonds.

Q: If I decide to buy a house in India, this may take time. Till such time, can I park the money in NRO account?

A: If you are not investing the money in house on or before filing the Income Tax Return, you have to park the money (equal to capital gains) in a specified account called ‘Capital Gain Account Scheme (CGAS).

Q: Are you sure that NRI can invest in CGAS?

A: Yes; NRI can invest both in Capital Gains Bond as well as Capital Gain Account Scheme. Investment in Capital Gains Bond should be done within 6 months from the date of sale of the property; whereas deposit in CGAS can be done on or before filing Income Tax return.

In case you need any information or consultation, please mail to [email protected]

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About B E Kumar Prasad

B E Kumar Prasad
He is a Practicing Chartered Accountant at Bangalore, India. He has 26 years of experience in the areas of NRI matters, Income Tax, Setting up Business. He is also an Insolvency Professional and Registered Valuer (F&SA)He can be contacted at [email protected]

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Melanie Bowen
2021 years ago

I liked your blog so much.

I would like to thank you for the contribution.

Maria Smith
2021 years ago

Thank you for the article.

Great blog that I enjoyed reading.

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