Revenue generated from the sale of Immovable property is taxable in India. Any Property which held for more than 24 months is classified under LTCA (long term capital Asset). LTCA is calculated out of the sale proceeds with certain deductions the deductions are in with respect of Indexed cost of acquisition, cost of Inflation Index (CII) and Indexed cost of Improvement .and the net amount after those deductions are taxable at 20% (surcharge and educational cess). LTCA can be claimed as an exception from the Income-tax if the same amount is reinvested in government-approved bonds in India. (In six month against the date of transfer).There is also an option to invest in two residential houses in India. In a condition that the long term capital gain does not exceed Rs 2 crores.
There are restrictions on the sale of new house and reinvestment in bonds and the exemption is not available for a newly constructed house. If the gain from the capital asset is not invested up to the due date of filing the Tax returns (July 31) now it is being extended to November 31 due to the spread of coronavirus and associated Lockdown the amount of capital gain can be deposited in the capital gain account as per capital gain account scheme (before the date of filing the return) and this amount can be reinvested in new house property successively. The remaining portion of the amount which is neither reinvested nor deposited in the capital gain scheme will be taxable.
As per Income tax rule, if the seller is an NRI, he is eligible for TDS (tax deduction at source) on the taxable income out of the sale of immovable property. In the case of LTCG, the specified amount is 20% (including surcharge and education cess) and 30% in the case of STCG. According to the exchange control law, an NRI can claim up to $1 million from the sale of property in India, and for the remittance exceeding $ 1 million requires special permission from Reserve Bank of India. The remitter is also needed to furnish the authorized information in Form 15 CA Electronically and Form 15CB from the chartered accountant.
