Your question – income tax: NRIs can claim benefits under the tax agreement

Written by Chirag Nangia

I have been working in Zambia since 2000 and sending my salary to my NRE account in India. Is it taxable in India? If it is taxable, under which section should I show it when filing IT return?

It has been held in various judicial declarations that receipt of salary in his Indian NRE account by NRI for services rendered outside India is not taxable in India. Further, interest earned by NRIs on such NRE accounts is also tax-free. NRIs are earning in the form of salary and interest, more than Rs 2,50,000 they have to submit income return in ITR-2 form. However, NRIs can claim benefits under the tax agreement and claim a refund if TDS is deducted from their income. For this, you need to adjust the TDS credit and advance tax as reflected in Form 26AS.

I bought a residential house in 1982 for Rs. 55,000. I spent Rs 4 lakh in 1991 to renovate and construct the first floor. I sold the house on November 27, 2021 for Rs. 70,87,000. How do I claim a tax deduction on long-term capital gains? I paid Rs 70,870 as transaction tax. I have invested money in a flat under construction.
-M Hanumantha Rao

To calculate the capital gains on the sale of the property, since you have purchased the property, the cost of acquisition will be higher than the actual cost or FMV of April 1, 2001, which is indexed to the cost of inflation and any improvement. Before April 1, 2001 will be ignored. Further, if the net consideration arising out of the sale is invested for the purchase of a residential home property (one year before or within 2 years from the date of transfer) or for the construction of a residential house (within 3 years from the date of transfer), the proportional capital gain under section 54F Exempted under This discount is allowed if an appraiser does not own more than one residential home property on the date of transfer. So the calculated LTCG is 20% taxable, with 4% cess. Further, the tax paid by you under section 194 IA is TDS, for which the buyer of the property has to deduct% 1% tax at the time of payment of sale consideration.

Author Director, Nangia Andersen LLP. Send your question to [email protected]

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