Tax implications for NRIs

Falling in rupee & Property market in India attracts NRIs for Investing in India. NRIs can Purchased residential or Commercial properties in India. Agricultural Land and farm house is not allowed for NRIs for Investments.

NRIs are also subject to TDS withholding (at the rate of 1 %) for property purchases over Rs 50 lakh.

Now look at tax implications for a non-resident Indian when buying, selling or renting property:

Rent Received from Property or against the property:
NRI has to file a tax return in India in case the rent received along with other income exceeds the threshold limit. There may be some tax relief available under the Double Tax Avoidance Agreement (DTAA) for NRIs who are tax residents in certain countries.

Deductions one can get against the property:
It is the same as for residents or Indians. MCD taxes paid during the year and housing loan interest payment are deductible.

Wealth tax: An NRI is exempt from wealth tax on a property that has been rented for more than 300 days. Also, one vacant house property can be declared as self-occupied property and is exempt from wealth tax.

Tax payments to consider during a sale:
can get long-term capital gains rate for property held for over 36 months and can claim exemption by investing in another house property or specified bonds.

A property which is not rented out is treated as a self-occupied property and the taxable value is NIL.