dear learned advocates
I was working abroad and purchased a flat from the amounts deposited in my NRE account in 1998 in india.
After 23 years of working abroad I returned to India permanently in 2020 and became a resident Indian.
now I want to sell one flat purchased in 2000. can I do it as resident Indian as per the existing laws.
your immediate valuable advice would be appreciated with respect to income tax etc act.
Best regards
Dear Maqsud Ahmed,
I have gone through your query thoroughly and here I would like to provide some pieces of advice that might help you out, concerning the purchase of the flat from NRE funds.
Let me clarify that the tax will be determined based on certain factors, such as residency status, source of funds, etc., whenever you decide to sell the property, as mentioned in the provisions of the Income Tax Act, 1961.
The sale of property that you have acquired during your non-resident status (as in when you were working abroad), will be considered as a capital asset sale in India, as you shifted to India as a resident in 2020.
The taxability of the property proceeds will totally depend on the type of asset under which the property comes under. Is it a long-term capital asset or a short-term capital asset?
Let me make you understand that the classification of the assets depends on the period of holding as per Section 2(14) of the Income Tax Act. In your case, the property was purchased in 2000, so it will be counted as a long-term capital asset and will be governed by the Long-term capital gains tax (LTCG) as per Section 112 of the said act.
Long-term capital gains will be calculated by deduction of the indexed costs of acquisition from the sale proceeds. Typically, the tax rates on LTCG will be around 20% with the indexation benefits.
Hence, this can be concluded that you are free to go with the sale of the property and the sale will be subjected to long-term capital gains tax. You can also be provided with certain types of exemptions as per Section 54 of the said act if you decide to reinvest the proceeds of the sale in another residential property.
I hope I was able to make things clear for you. If you need any clarifications regarding the concept, you can catch up with me on this LinkedIn profile. ( www.linkedin.com/in/pankhuri-rastogi-9221b2289 )
Thank You.
