For Non-Resident Indians (NRIs) residing in the UAE, managing finances and investments requires careful planning and awareness of tax implications, especially when dealing with assets in India. Besides, it is also critical for NRIs to know the dos and don’ts of savings and investments.

NRIFOCUS.COM spoke to CA Dhaval K Jasani, Founder and CEO, ZTI Global Consulting to find out all about property tax, saving schemes and investment
options for NRIs in the UAE. Part 1 of the series.

What are the tax obligations for NRIs on property in India

When NRIs sell property in India, they face tax obligations on any profits made, which necessitates the buyer to withhold tax at rates of 20% for long-term gains
and 30% for short-term gains.

To potentially lower these tax burdens, NRIs have the option to apply for a certificate allowing for reduced or nil withholding tax. Furthermore, by reinvesting the sale proceeds into another property within a certain period, NRIs can further mitigate their tax liabilities.

For NRIs, buyers of the property are supposed to deduct TDS (Tax Deducted at Source) at 20% of sale consideration for long-term gains and 30% of sale consideration for short-term gains. Alternatively, NRIs may submit and online application to the TDS Assessing Officer for NIL withholding tax / lower withholding tax. Once this request is granted and certificate issued, the buyer is to be notified to deduct TDS at the rate prescribed in such a certificate.

Over and above a lower tax deduction certificate, NRI’s also have the privilege to deposit funds in a prescribed bank account and reinvest proceeds for acquisition of another property within a prescribed time-frame- that is one year before the sale of property or within two years after the sale of property. They may also construct a property within three years from the date of sale of property, to reduce their tax obligation.” – editor@nrifocus.com