You surely must have heard the term “incoming free” this was a term we were familiar in the early 1996 onwards when the mobile phones started coming to our city, country and certain schemes were run as Incoming Free and while outgoing calls were around Rs.10 to Rs.15 per 3 min call. The reason I am referring the above is in India when a Non Resident Indian is buying a property he is free to send as many Dollars and Pound or Dirhams into his bank account which is NRO in India or directly remit to the Home Sellers account or the Builders/Developers account without any questions asked. This surely is easy and NRI or first time home buyers who across the world make some good savings and they work hard and send their well earned legitimate income back to their motherland or home country India with pride. Till here it’s all happy story, he is happy, he has a home away from foreign land where he could be deported any time etc (Gulf guys usually have this challenge).
Now, let us assume he has to sell his property after a few years in India in any state or city. His time has begun to get buried in a maze of paperwork and if he is acquiring a land or property or mortgage etc and via succession than he has had it with the paper work. If he has capital gains on the asset then he has to deal with good old Income Tax etc.
A list of documents which he/she/they will need in any case to sell the property would be as follows:
- Last 3 years or 5 years income tax returns filled in India. So if he has not filled his returns regularly, he will have to file the same first.
- Of course he will need PAN Card to apply for that, if no Pancard then he has to apply for Pancard online.
- He has to produce bank statements of the amounts remitted from overseas to confirm that the amount was remitted from a foreign land into his account or the developer account.
- If property is mortgaged then he has to clear the loan.
- If he has acquired the property in succession after the demise of a parent/s then he has to produce a valid Will, death certificate, share certificate of the property in case the same is in a housing society with his name clearly written on the back side of the share certificate and the succession is approved by the managing committee.
- He will have to ensure that the original title documents and the chain of agreements are with him.
- He will have to get a society noc or the developer noc if the flat is under construction.
- Payment of property tax and Society maintenance and the copies there of to be produced to the purchaser.
- After all this when he goes for the sale he will have to either get the lower TDS deduction certificate from the income tax, India or he will have to get 23% approximately Long Term Capital Gain deduction from his saleable value immaterial of the fact that he has capital gains or not.
Purchase Agreement Value was 1 Cr in the year 2001
And Sale Value is 1.50 Cr in 2021. Total long term capital gain is 50 lakhs and out of this he will get 20 years benefit of indexation where in for such a long period his tax will be NILL.
Still as per the Government of India income tax rules you will either have to apply for Lower Tax Deduction Certificate through your Chartered Accountant in India who will also file your returns on line.
Your lower tax certificate will enable you Zero taxation and your buyer does not have to then deduct any Tax at Source – TDS which will save you a lot of time and money.
It’s a very tedious task to get your a digital identity through emundra etc which your CA will brief you on the basis of that you can file your returns.
You may also need a Person of Indian origin PIO Card in case you are holding a Foreign Passport.
Once all this is done, the after signing the agreements, registering them with the Registrar and after receiving all the funds you will have to file More documents to your bank to remit the funds back into a foreign country bank account.
This process can take anywhere from 1 month to 6 months depending on the efficiency and knowledge of each party.
Sandeep Sadh is a specialist with NRI transactions and handles all property matters of buying and selling in Mumbai, India. He also handles property sale matters in other cities.
For a detailed discussion please feel free to connect on email I’d or phone number +91 9820030685 with what’s app.
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TDS Related queries – What are the implications of Selling property in India from Income Tax perspective? TDS on Sale of property by NRI above 50 Lakhs? TDS on Sale of Property by NRI below 50 Lakhs? TDS on Sale of property by NRI? Lower Deduction Income Tax Certificate for NRI? TDS on Sale of property if i am residing in Dubai, Hongkong or Singapore? Which country has maximum number of NRI selling property or buying property in India.