I’m a United States resident holding an OCI (Overseas Citizen of India) card. I have 3 homes in India that I acquired in the very early 2010s. I intend to market 2 of them– one in December and the various other in February 2025. Against the sale of these 2 homes, I intend to acquire 2 brand-new homes. Can I obtain the advantage of reinvestment? And exists any kind of limitation for reinvestment?
-Name held back on demand.
Your homes would certainly certify as ‘long-term capital assets’, whose limit is specified to be a holding duration of greater than 24 months coming before the day of transfer.
Vide Finance Act (No 2) 2024, non-residents can no more take advantage of indexation, however the tax obligation price has actually been lowered from 20% to 12.5% (plus relevant additional charge and cess). However, you can still assert an exception from tax obligation on resources gains under area 54 if you reinvest the resources gains right into a brand-new property (either using an acquisition or building and construction). Against each sale of a house, you can reinvest the earnings approximately the quantity of resources gains right into a brand-new property. Section 54 does not restrict the amount of times you can assert this exception in a, and thus the resources gains tax obligation exception for both the sale occasions (December and February) can be asserted with each other throughout 2024-25.
In order to assert the exception, the recommended period to acquire a brand-new property is one year prior to or more years after the day of sale. However, intend you have actually not acquired the matching brand-new houses by 31 July 2025. In that instance, you will certainly require to transfer the unutilized resources gains in a ‘capital gains account’ opened up under the Capital Gains Account Scheme, which need to be utilized within the recommended two-year duration. There is likewise a lock-in duration of 3 years for the brand-new property, falling short which the quantity of exception previously asserted will certainly be reclaimed.
The Finance Act 2023 has actually presented a cap of 10 crore on the expense of the brand-new residential property to assert the resources gains tax obligation exception. If the expense surpasses 10 crore, the excess resources gains will certainly be exhausted. This limitation uses separately per reinvestment.
The India- United States dual tax obligation evasion arrangement does not supply any kind of details remedy for resources gains tax obligation inIndia And in spite of declaring exception under area 54, you might still be reliant pay tax obligation in the United States on the quantity of resources gains calculated according to United States tax obligation regulation. You are suggested to speak with a certified United States tax obligation specialist to comprehend your United States resources gains tax obligation ramifications.
Also Read: Get hard: A tolerant resources gains tax obligation routine has actually been misshaping motivations
Harshal Bhuta is companion at P.R. Bhuta & & Co.
