Homesgofast.com the international real estate portal clarifies for its UK based Indian property buyers the income tax situation when purchasing Property in India
Non resident Indians (NRIs) ââ¬â
Indian citizens resident outside India ââ¬â can buy as many residential or
commercial properties in India as they like. However, if you are considering buying a property in India
there are taxation implications should you be aware of.
Our guide looks at the unusual
income tax regime surrounding owning a property in India.
Owning more than one property will result in an income tax liability
If you own more than one house in
India, only one of them will be deemed as ââ¬Ëself occupiedââ¬â¢ and there is no
income tax on this property.
Any other properties (whether you
rent them or not) will be treated as if you do rent them. You have to calculate the rental income
from the other properties based on certain valuations prescribed by the income
tax rules and pay the appropriate tax on this ââ¬Ëincomeââ¬â¢.
This rule also applies to
properties outside India. Vikas
Vasal, Executive Director of KPMG India told The Times of India: “At the time of drafting the Income Tax
Act, one did not envisage a situation where an Indian would own properties
overseas. But now, more and more Indians are settling abroad. So from the
reading of the Act, the rule of ‘more than one property’ will apply to global
properties.”
If you are an NRI and own only
one property globally and that property is in India, you would not have to pay
any income tax on it in India.
When you buy overseas property you will usually also be
acquiring tax obligations in that country. Many countries
require international real estate buyers to register themselves
with the local tax authority before they can complete their purchase.
However, letââ¬â¢s assume that you
are an NRI resident in the UK. You own and live in a house in the UK. You also own a house property in India. Even if you do not rent out the Indian
property, you would have to pay income tax on deemed rent in India.
You should also bear in mind that
even if you have inherited a property in India and that is not your only
property, you would still have to pay tax on deemed income.
