I purchased some shares about four years ago. I want to sell them as prices have gone up a lot. What are the tax implications of doing so for a non-resident Indian (NRI)? I also wanted to know if tax can be deducted at source on such a transaction.
Capital gains from sale of shares of an Indian company are taxable in the hands of an NRI. If your total taxable income in India does not exceed the maximum amount not chargeable to tax (i.e. Rs.2.5 lakh), you are not liable to pay tax.
If the shares are listed on a recognised stock exchange in India, the capital gains will be classified as long-term if held for more than 12 months. Long-term capital gains (LTCG) from sale of listed Indian equity shares are tax exempt.
If the shares are not listed on a recognised stock exchange in India, capital gains will be classified as long-term if held for more than 36 months. LTCG from unlisted shares are taxed at a concessional rate of 20% (surcharge and education cess are extra). However, a tax exemption can be availed if the LTCG is re-invested in specified bonds or a residential house in India.
Tax is not deducted at source on income earned by way of sale of shares if remittance is received in India. In this case, tax could be paid as advance tax in three instalments (30% by 15 September, 60% by 15 December and 100% by 15 March) or before filing of tax return by way of self-assessment tax along with applicable interest.
In case remittance is received outside India by an NRI, tax will be deducted at source.
A special provision exempts NRIs from filing a tax return if their sources of income from India only include investment income and LTCG.
I’m an NRI living in Australia. I want to purchase a commercial property in India and plan to avail a loan for it. Is the interest on the loan tax deductible?
Interest on loan taken in India for acquisition of property is allowed as a tax deduction while computing income from such property. However, no deduction can be availed for repayment of principal amount of the loan for commercial property.
Interest on housing loan payable outside India and on which no tax is deducted in India is not allowed as deduction while computing the income from such property.
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