What is the Capital Gains Tax on Property received as Gift by an NRI in India?

There are different Tax laws and Other Laws pertaining to Gift of Property to a NRI. You need to first check the nature of the property, whether it is a Apartment or House or Shop or Land or Plantation etc. You will need to check if this property is permitted to be gifted to a NRI or not as per Land/Property and FEMA guidelines in force.

There may be a tax implication similar to ‘Capital Gains’ or as ‘Other Income’ sources on Gifted property towards the Gains portion of the property and there are provisions for the Tax to be applicable on the full value of the property Gifted to a NRI also.

You would love to receive a Christmas Gift, however it is not as simple to receive a Gift of a property in India, which could actually put you in trouble with Tax authorities in India if it is not planned and documented well.

How to Calculate Capital Gains Tax on Gifted Property sale by a NRI?

In case of sale of property by a Non Resident Indian, which was previously received as a gift, the Capital Gains Tax is a little complex. The Capital Gains Tax will be calculated on off course the sale value. However depending on who gifted the property to you, the cost price to determine the Capital Gains can be any one of the following:

 NIL (Zero)

The Cost price of the person who has gifted the property to you.

The fair value of the property during the time of gifting.

It is very critical to understand and maintain proper documentation for proper and correct computation of Capital Gains and the Tax thereof for a Non Resident Indian to avoid unnecessary penalties and harassment.

When you are selling a Gifted Property in India as a Non Resident Indian, it is important to have clear documentation and optimised taxation.

For example, if Mr Guru Gupta, an Non Resident Indian, has been Gifted a property by his uncle, Mr Bajrang Jaiswal by way of a Property Gift Deed, and Mr Guru has then sold the property after say 5 years for Rs 1.5 crore, then there may be a Gift Tax payable by Mr Guru when he has received the property, and a Capital Gains Tax will also be payable by Mr Guru. The Capital Gains Tax on a Non Resident Indian Mr Guru will be on the difference Selling Price which is Rs 1.5 Crore and one of the following options:

The Cost Price of Mr Bajrang Jaiswal, his uncle.

The fair market value of the property on the incidence of receiving the Gift

Zero 

    

As a Non Resident Indian and selling a property in India, it is very important that you consultant an experienced and qualified professional and Legal Firm which specialised in International and Cross Border and NRI Taxation for proper guidance.

Tax Assist is a professional income tax consultancy in India for both corporate houses and individual tax payers; the latter comprising Salaried Individuals, Seafarers, Professionals and Non Resident Indians.

With the help of Tax Assist and its team of income tax professionals, taxpayers can minimize their Income Tax liability, maximize their net income and create opportunities to save for current and future needs while maintaining proper accounting standards and income tax returns which are compliant with the Law.