Is ltcg taxed again in usa, if paid in india?

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Rashmi (Querist)
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02 November 2013 Dear Experts,

I have one query. An US citizen (Person of Indian Origin with green card Holder) has sold a residential house property in India during July’2013. He got Long Term Capital Gains of INR 50,00,000. He has no plan to take the sale proceeds to USA rather willing to invest the entire sale proceeds in India (for buying a new Residential House Property) in the next one month (The property sold was bought through the income from Indian sources only). Even he is ready to pay all the required taxes that Indian Income tax authority asks for. But he got advise from his CPA USA that even if he re invest entire sale proceeds and gains still he has to pay tax in USA for this transaction.

How far this is true? Can you share the wordings in DTAA whether something has been indicated in respect to such case?

Even if he wants to take the money to US after paying all required taxes in India, does he still need to pay taxes on such income there in the USA?

It will really be a great help with your answer. Many thanks in advance.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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02 November 2013 Dear Rashmi,

the problem with India-USA DTAA is that with respect Capital gains, Article 13 provides that Capital gains be taxed as per the domestic laws of each state. So yes, this transaction shall be taxed in both the countries.

So, where you claim exemption in India, you shall be taxable in USA.

In case taxes are paid in India, he will be able to claim credit for the same under Article 25 of the DTAA.

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