Sale of immovable property in India taxed in yr of sale

I’m a citizen of Singapore. I purchased an house in Chennai in 2014 for ₹40 lakh. I now intend to promote the flat with no revenue. How ought to I account for the proceeds from the sale? Is there any formality that I ought to adjust to? Funds for the acquisition of the house had come from my NRE (non-resident exterior) account. All funds remitted to this account had been constituted of Singapore.

—Name withheld on request

Sale of any immovable property in India will probably be taxable within the yr of sale. Any immovable property held for greater than 24 months is assessed as long-term capital asset and the taxable capital acquire on them would be the sale consideration much less expenditure, much less the listed price of acquisition, much less the listed price of enchancment. Long-term capital acquire (LTCG) is taxable at 20% (plus relevant surcharge and well being and training cess). The LTCG could also be claimed as exempt from revenue tax to the extent that the acquire is reinvested in specified bonds in India (inside six months from the date of switch). The exemption is proscribed to as much as ₹50 lakh per monetary yr and the bonds will probably be locked in for 5 years. Alternatively, LTCG could also be claimed as exempt if the capital features are invested in a single residential home in India. If the LTCG stays un-invested until the due date of submitting of India tax return (31 July), you need to deposit the quantity of capital acquire in a capital acquire account scheme (not later than the due date of submitting tax return) and subsequently withdraw this quantity for reinvestment in new residential home inside the stipulated interval (two/three years, because the case could also be). If your entire quantity will not be reinvested or not deposited within the scheme, the remaining portion of the LTCG will probably be taxable. As you’re a citizen of Singapore, if LTCG on sale of flat in India is taxable as per tax legal guidelines in Singapore, it’s possible you’ll declare international tax credit score underneath relevant provisions of the Double Taxation Avoidance Agreement between India and Singapore.

Sonu Iyer is tax associate and folks advisory companies chief, EY India.

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