How would the rent received from the property be treated?
Rent received is taxable in India and NRI has to file a tax return in India in case the rent received along with other income exceeds the threshold limit.
The rent may be additionally taxed in the NRI’s country of tax residence. There may be some tax relief available under the Double Tax Avoidance Agreement (DTAA) for NRIs who are tax residents in certain countries. This may allow one to get credit for Indian taxes paid.
What are the deductions one can get against the property?
It is the same as for residents. Municipal taxes paid during the year and housing loan interest payment are deductible. Standard deduction of 30 per cent of the net rent (gross rent less municipal taxes) can be obtained for repair and maintenance, irrespective of actual expenditure.
Housing loan principal repayment, stamp duty and registration charges are allowed as deduction from one’s gross income under the overall limit of Section 80C.
How does one handle a vacant property?
Again, treatment here is similar to a resident. A property which is not rented out is treated as a self-occupied property and the taxable value is NIL. The only deduction available against such property is interest on housing loan up to Rs 1.5 lakh per year. When there are more than one property that is not rented, then the owner can choose one property as self-occupied and all the other un-rented properties shall be deemed to be let out, even if not actually let out. For these, the rent that the property would likely fetch is considered as gross rent and all other deductions as applicable for a rented property will be allowed.
Deduction for principal repayment on housing loan can be obtained on all property, whether it is rented, self-occupied or deemed to be let out.
How is wealth tax applicable for NRIs?
Wealth Tax has been abolished and is not in force.
What are the tax payments to consider during a sale?
NRIs are subject to capital gains tax in India, similar to what is applied to residents. They can get long-term capital gains rate for property held for over 24 months and can claim exemption by investing in another house property or specified bonds. Capital gains may also be taxable in the NRI’s country of residence. Relief may be available in the form of credit for Indian taxes paid, in case the NRI is a tax resident of a country with which India has a DTAA.
Are there any limits on the amount that can be repatriated?
Remittance outside India up to $1 million per financial year is allowed out of balances held in NRO account on submission of documentary evidence and certificate from a chartered accountant in the prescribed format. Remittance exceeding $1 million will require special permission from the Reserve Bank of India (RBI).
Under the income-tax law, the remitter is required to furnish prescribed information electronically in Form 15CA (self-declaration) based on a certificate obtained from a chartered accountant in Form 15CB, wherever applicable.