• TDS & Capital gain on property sale

Hello,
I am an Indian citizen but I was staying in USA for last 6 years due to work assignment. I have returned back since 1st June 2019. I have plan to sell one of my properties in India, so I would like to know a few things about my resident status, related TDS section and capital gain tax and all these are co-related.

Questions:
1. Resident Status: 
My understanding is that my current resident status is NRI as I did not spend any time in India in the year 2018 (I was staying in USA for last 6 years for work) and the status will get changed to Resident after staying 182 days in India.
Does it mean I will get Resident status from Dec 2019(I came India on 1st June 2019 and thats how 182 days will be completed by end of Nov 2019)?

2. TDS on sale of property:
If I sell property(flat) anytime after 1st Dec 2019(when my status get changed to resident as explained above), the buyer will pay 1% TDS as per section 194-IA but If I sell before Dec 2019, TDS will be deducted @20% as per section 195. Please confirm if this is correct.

3. Capital gain tax: 
I would like to know which date is considered to understand if capital gain on property sale would be a long term one or short term one. Is the 2 years calculated from the date of booking or date of sale agreement or date of possession of the property? In my case, property was booked in 2012, sale agreement was executed in 2013, possession was taken in Feb 2018. If I sell in 2019, I will have to pay short term or long term capital gain?

4. Short Term Capital gain tax:
Let's assume that I will have zero tax obligation after considering different types of tax exemption for the current financial year. But then there is a short term capital gain which needs to be considered for taxation. In this case how the tax slab will be determined? If the short term gain is less than 2.5L and which is the final taxable amount, will it not attract any tax as per the tax slab structure?

Thanks!
Asked 6 years ago in Taxation

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6 Answers

 

Your data is incomplete. So I rewrite the answer. 

You will be Resident (resident and ordinarily resident ) if 

 your status  was resident for any 2 years out of  10 f. Y preceding current f. Y. 

  OR

If you lived in India for minimum  of 730 days during 7 f. Y. Preceding current f. Y. 

 

If none of above condition is satisfied you will be Resident but not ordinarily resident .

And accordingly sec 195 will apply to you for that entire financial year. 

Date of execution of sale deed shall be considered as date of sale. 

No tax if total taxable income including ST capital gain is below the threshold limit. 

Kallol Majumdar
Advocate, Kolkata
2837 Answers
14 Consultations

1. You will get resident status after March 2020 as you are treated as resident when in last financial year you are staying more then 182 days.

2. After december also bit shall be 20 percent only.

3. See it shall be considered from date of.allotment letter.

4. The capital gain shall be treated as income and on same slap shall apply. 

Shubham Jhajharia
Advocate, Ahmedabad
25513 Answers
179 Consultations

It's from the date you received the proceeds in your account. 

Yes it will attract tax 

Prashant Nayak
Advocate, Mumbai
34526 Answers
249 Consultations

At present you are holding NRI status, so sale is not advisable at present, Resume your residential status first.

Holding property for 3 years from date of purchase/sale deed, LTCG will levy, whcih can also be saved. NO exemption of STCGT.

Yogendra Singh Rajawat
Advocate, Jaipur
23082 Answers
31 Consultations

Yes TDS will be deducted @ 20% 

Capital gain tax will be applicable on your property You don't reinvest the consideration to purchase some other property with in Two years from date of sale. 

Mohit Kapoor
Advocate, Rohtak
10686 Answers
7 Consultations

1.  If you have decided to stay back in India permanently then you dont have to show the NRI status, you can proceed based on the aadhar card and other idn=entity proofs.

2. If you show yourself as a NRI then you may have to pay TDS at the rate of 22.5%.

3. Since the date of registered sale deed on your name, you will be considered as the owner fo the property.

If it is less than two years as on the date of resale then you may have to pay short term capital gains tax.

4. short term capital gains shall be computed as per the procedures.

The gain on a depreciable asset is always taxed as short term capital gain. The consideration or amount received by the seller on transferring or selling the asset. Expense incurred in transferring the asset, like brokerage or fee. The amount for which the asset was acquired

Illustration
In April, 2019 Mr. Rahul sold his residential house property which was purchased in
May, 2017. Capital gain on such sale amounted to Rs. 8,40,000. In this case the house
property is sold after holding for a period of less than 24 months and, hence, gain of Rs.
8,40,000 will be charged to tax as Short Term Capital Gain.

 

T Kalaiselvan
Advocate, Vellore
89992 Answers
2495 Consultations

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