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Business News/ Money / Personal Finance/  Do NRIs need to pay tax on capital gains?
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Do NRIs need to pay tax on capital gains?

NRIs who sell property situated in India have to pay capital gains tax in India

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I have been a US resident for the past seven years. I had purchased a flat in Kolkata five years ago, which I want to sell. Will I need to pay capital gains tax in India? How much money can I repatriate?

—Vipin

 

NRIs who sell property situated in India have to pay capital gains tax in India. If a house property is sold after a period of two years, the capital gains are categorized as long-term capital gains. In case property is held for two years or less, the gains shall be categorized as short-term capital gains. The calculation of capital gains tax shall be the same as for a resident Indian. Long-term capital gains are taxed at 20% and short-term gains shall be taxed at the applicable income tax slab rates for the NRI based on the total income which is taxable in India for the NRI. When an NRI sells property, the buyer will deduct TDS @ 20%. NRIs can save tax on capital gains by claiming exemption through various provisions of the Income Tax Act similar to those available to resident Indians. In case any tax is payable in the country in which the NRI is resident, he/she can claim benefits available under the Double Taxation Avoidance Agreement between India and such country.

 

I hold a non-resident ordinary (NRO) portfolio investment scheme (PIS) account, which I use to trade in the Indian stock market. Can I claim exemption for the short-term capital gains (STCG) tax that I pay for my trades?

—Name withheld on request

 

Usually, an NRI shall pay tax on capital gains from sale of shares listed on the Indian stock exchanges the same way as a resident Indian. The tax rates and the method of calculation of gains and exemptions available are similar to those of a resident taxpayer.

Capital gains earned by an NRI are subject to TDS, which shall be deducted before a payment for sale is deposited in the NRI’s account.

Archit Gupta is founder and CEO, ClearTax.

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Published: 20 Dec 2021, 10:44 PM IST
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