How Are NRIs Taxed On The Sale Of Real Estate

Any profit you make after selling or transferring a piece of land or buildings, whether residential or commercial, are treated as long-term capital gains if they are sold after 24 months. If the profits are sold within two years, the same would be considered as short-term capital gains. These types of capital gains are subjected to tax at the slab rate applicable to the taxpayer. On the other hand, as the union budget presented on the 23rd of July, 2024, the long-term capital gains are taxed at a flat rate of 12.50 per cent without any indexation benefits. 

There are no other key differences regarding taxation of the short-term capital gains and long-term capital gains on the profits acquired from the sale of a building or land between a resident and a non-resident Indian other than a resident Indian has the option to pay tax either at 12.50 per cent on plain long-term capital gains or indexed long-term capital gains if the property was acquired before the 23rd of July 2024. 

There is also one more difference between a resident and a non-resident taxpayer. If the income of a resident Indian other than long-term capital gains and short-term capital gains on the listed shares and equity-oriented schemes is below the exemption limit, he/she can counterbalance such inadequacy against these capital gains and pay tax on the balance of capital gains. This convenience to balance out the shortfall in the basic exemption limit is not applicable to any non-resident individual.

If you are an NRI, you can also save long-term capital gains by investing the plain capital gains either in a residential property in India or by investing the long-term capital gains in capital gains bonds. 

A non-resident Indian may send up to USD 10 lakh annually to the Reserve Bank of India without obtaining special RBI approval. Additionally, up to two residential properties may be sold by an NRI and repatriated. Remittances from outside India or from an NRE or FCNR account should not be greater than the amount paid for the property's purchase. Such a payment would be eligible for any house loan serviced by these sources.