Sale of property in India will be taxed in the year of sale

PIOs are allowed to repatriate up to $1 million per financial year out of the sale proceeds of assets in India acquired by her by way of inheritance

I am a non-resident Indian, and had invested in sovereign bonds (G-secs) in India 11 years ago. I want to withdraw the matured money. Will I be taxed?

—Christopher Samuel

Amount received on maturity of G-secs is not taxable in India if they are notified tax-free bonds. From your question, we infer that the bonds have already matured and the money is lying in your bank account in India. If you intend to withdraw the matured money, there should not be any tax deducted at source (TDS).

Can a Person of Indian Origin (PIO) sell inherited property in India and repatriate the amount? What are the tax liabilities for the same?

—Chandan Prakash

PIOs are allowed to repatriate up to $1 million per financial year out of the sale proceeds of assets in India acquired by her by way of inheritance. This is subject to production of documentary evidence in support of inheritance of asset and a certificate from a chartered accountant in the prescribed format. Remittances exceeding $1 million in any financial year require prior permission of the Reserve Bank of India. Sale of property situated in India will be taxable in the year of sale.

An immovable property held for more than 36 months is classified as a long-term capital asset. Capital gains on sale of these assets are subject to tax of 20% (excluding surcharge and education cess). For an inherited property, holding period is calculated from the date of acquisition by the original owner. Taxable capital gain will be net sale proceeds less indexed cost of acquisition (i.e., adjusted as per cost of inflation index or CII) less cost of improvement. Capital gains can be claimed exempt to the extent the money is re-invested in India in specified bonds or a residential house (to be either purchased within two years or constructed within three years of transfer of the land). If the capital gains remain uninvested until the due date of filing of India tax return (31 July), you can also put the amount into a Capital Gains Account Scheme (CGAS) not later than the due date of filing your India tax return. You can subsequently withdraw this amount for reinvestment.

If the entire amount is not reinvested or not deposited in CGAS, the remaining portion of the gain will be taxable. A provision is available to non-resident Indians (NRI) with investment income and long-term capital gains as the only sources of income. They are exempt from filing tax return in India if tax is deducted at source (TDS) on such income.