Is ltcg taxed again in usa, if paid in india?
Rashmi
(Querist) 02 November 2013
This query is : Resolved
Dear Experts,
I have one query. An US citizen (Person of Indian Origin with green card Holder) has sold a residential house property in India during July’2013. He got Long Term Capital Gains of INR 50,00,000. He has no plan to take the sale proceeds to USA rather willing to invest the entire sale proceeds in India (for buying a new Residential House Property) in the next one month (The property sold was bought through the income from Indian sources only). Even he is ready to pay all the required taxes that Indian Income tax authority asks for. But he got advise from his CPA USA that even if he re invest entire sale proceeds and gains still he has to pay tax in USA for this transaction.
How far this is true? Can you share the wordings in DTAA whether something has been indicated in respect to such case?
Even if he wants to take the money to US after paying all required taxes in India, does he still need to pay taxes on such income there in the USA?
It will really be a great help with your answer. Many thanks in advance.
Anirudh
(Expert) 02 November 2013
The relevant Article in the Indo-US DTAA Treaty is as under:
Article 13 : CAPITAL GAINS - 1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other state.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.
3. Gains derived by a resident of a Contracting State from the alienation of ships or aircrafts operated in international traffic, or movable property pertaining to the operation of such ships or aircrafts, shall be taxable only in that State.
4. Gains from the alienation of shares of the capital stock of, or other corporate rights in, a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State.
5. Gains from the alienation of shares other than those mentioned in para-graph 4 in a company which is a resident of a Contracting State may be taxed in that State.
6. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident.
