Money Matters: Essential Factors NRIs Must Know Before Selling Property In India

Selling property in India can be a lucrative endeavor for Non-Resident Indians (NRIs), but it requires careful planning and adherence to legal regulations. Whether you're selling residential, commercial, or agricultural land, here are some key considerations every NRI should be aware of before initiating the process:

1. Understanding Legal Formalities

NRIs need to be well-versed with the legal requirements and documentation procedures involved in selling property in India. This includes obtaining necessary clearances, verifying ownership titles, and ensuring compliance with local regulations.

2. Tax Implications For NRIs

Selling property in India attracts various taxes, including capital gains tax. Non-Resident Indians (NRIs) are subject to taxes on capital gains resulting from property sales. Short-Term Capital Gain (STCG) taxes are applicable if the property is sold within two years of purchase, calculated according to the NRI's income tax slab rates. Long-Term Capital Gain (LTCG) tax, set at 20%, applies to property sales made after two years.

3. Repatriation Rules

NRIs must understand the rules governing the repatriation of sale proceeds. The Reserve Bank of India (RBI) regulates the repatriation of funds earned from the sale of property in India. If you bought the property while residing in India, the sale proceeds must be deposited into your NRO account. You can transfer up to USD 1 million per calendar year from your NRO Account (including all other capital transactions), once all taxes have been settled.

However, if you purchased the property while being a non-resident, you can repatriate the proceeds outside India under the condition that the property acquisition adhered to the foreign exchange laws applicable at the time of purchase.

4. Documents Required by NRIs To Sell Property

The necessary documents required by NRI for selling property in India are as follows:

• Passport
• PAN Card
• Tax Returns
• Address Proof
• Allotment Letter
• Encumbrance Certificate
• Documents from the building society

5. Compliance with Foreign Exchange Management Act (FEMA)

NRIs must adhere to FEMA regulations while selling property in India. FEMA governs transactions involving foreign exchange and regulates the repatriation of funds. Non-compliance with FEMA provisions can result in legal repercussions.

Don't miss:Money Matters: Everything NRIs Need To Know About Investing In Mutual Funds

6. Seek Professional Advice

Seeking assistance from legal advisors, real estate agents, and tax consultants specializing in NRI transactions can streamline the selling process and mitigate risks associated with property transactions in India.

Don't miss:Money Matters: Essential Retirement Planning Tips For NRIs

7. Documentation and Registration

NRIs must ensure all sale-related documents are properly executed, registered, and stamped as per applicable laws. Failing to adhere to documentation requirements can lead to complications during property transfers.

Herzindagi.comis Jagran New Media's gender and lifestyle vertical, catering to women of all age groups, helping them remain updated, on-trend and aware. To improve our performance and understand our readers' interests better, we have created this poll. This will take 2 minutes of your time, do help us out with thislink.

For more such stories, stay tuned to HerZindagi.