Capital Gain on Sale of Immovable Property by NRI

What is Capital Gain on Sale of Immovable Property by NRI?

There is always a doubt in the minds of NRIs about the taxability of gain arising from the sale of immovable properties in India. According to Indian tax law, any income or gain arising from the sale of immovable property is subject to tax in India. are the relevant provisions of the Income-tax act regarding taxation of income or gain from the sale of Immovable assets. Find the best tax-saving option for NRIs.

1. What is an Immovable Property?

The immovable property involves Land, buildings, or both. The NRI might have acquired right or ownership over the immovable property in the following ways

Inherited: Inherited from the ancestral property or by way of family partition or by way of gift
Acquired when he/she was resident in India using earnings in India
Acquired after becoming an NRI using earnings from a foreign country.
Taxation is the same for all the above properties however it is relevant for specific purposes as explained below.

Further Land can be classified as Agricultural land and non-agricultural land and Building as Residential and commercial buildings.

2. Long Term & Short Term Assets

The properties are categorized as Long-term assets and Short-term assets based on the period of allotment for tax purposes. Long-term asset: If the period of holding of an asset is more than 24 months, it is called Long term capital asset In the case of assets acquired by tradition or gift, the period of holding of the earlier owner shall also be included in the computation of the 24 months limit.

Short term asset: If the period of holding of an asset is 24 months or less, it is termed a Short term capital asset.

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