NRIs cannot buy agricultural land in India

Indian exchange control regulations permit an NRI to acquire immovable property in India, other than agricultural land or plantation property or farm house


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I am a non-resident Indian (NRI). Can I buy a commercial property in India with my sister? What will we be taxed, as I plan to shift back to India and let out this property?

—Ketan Sharma

Indian exchange control regulations permit an NRI to acquire immovable property in India, other than agricultural land or plantation property or farm house. Any income from letting out this property shall be taxable under the head, income from house property, in the hand of your sister and you, in the proportion of investment made. If rental income is below the taxable threshold, you are not required to file income tax return. A deduction of municipal taxes and standard deduction of 30% is available against rent received. Interest paid for a loan availed for purchase of the property is also available as a deduction against income. For vacant or self-occupied properties, the deduction for interest on loan is restricted to Rs.2 lakh.

I have been investing in equities through my non-resident external account in India and want to sell some of the shares. How will I be taxed?

—Shyam Saxena

Capital gains will be applicable when you redeem or sell past investments. If you sell equity shares that are listed on a recognized stock exchange in India after holding them for more than a year (long-term capital gains), you will not have to pay tax on the capital gains, provided securities transaction tax has been paid. And if it is sold after less than a year (short-term capital gains), you will have to pay tax at a lesser rate of 15% on capital gains provided securities transaction tax has been paid.

If an NRI sells unlisted shares and debentures of an Indian company that was acquired using foreign currency, the taxation process will require currency conversion and re-conversion for capital gains calculations. Capital gains will be taxable at 10% and no indexation benefit will be available.

What is the maximum tax-free amount that can be remitted to India?

—Sheetal B.

There is no cap on remittance of money to India. If the money is first received outside India, and then remitted to India (as a second transaction), no tax needs to be paid. If the money is directly received in India, it could be subject to tax depending on the nature of transaction.

Remitting to a person, other than a relative (without consideration), attracts gift taxation for the recipient if amount exceeds Rs.50,000.

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