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Business News/ Money / I am US citizen, inherited father's property in India. What are income tax rules?
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I am US citizen, inherited father's property in India. What are income tax rules?

The tax liability arises only when the inherited asset is sold

Share of profits on sale of the inherited property will be taxed under the head ‘Capital Gains’Premium
Share of profits on sale of the inherited property will be taxed under the head ‘Capital Gains’

My sister is a US Citizen who has got her share in our father’s house inherited through Will. Please guide on the tax liability, ITR be filed, how the Indian Rupee will get converted to USD and necessary form to be submitted for remitting the money.

Answer: Please note that there is no tax liability in India when one inherits any property. The tax liability arises only when the inherited asset is sold. Her share of profits on sale of the inherited property will be taxed under the head “Capital Gains". The same are taxed as short term or long term depending on the period for which the property was held by the current holders along with the previous owner who had paid for it. If the combined holding period is more than two years the profits will be taxed as long term @  20% plus cess of the proportionate share of profits after deducting the indexed cost from the sale price. Your sister can use ITR 2 for this purpose as she will have capital gains and also the fact that she is a non-resident under income tax laws. 

The Indian rupees will be converted into USD based on the exchange rate on the date of remittance.  The money can be remitted through banks which are authorized to deal in foreign currency called authorized dealers. No specific permission is required to be obtained from RBI for such remittance if the amount of remittance does not exceed ten lakh USD per year. Your sister may have to submit certificate in form no. 15CA online for remitting the money abroad. She may also have to obtain a certificate from an CA in form no. 15CB.

Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant on Twitter.

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Published: 13 Dec 2021, 11:43 AM IST
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