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Tax payable on long term capital gain for NRI

Subhankar Ghosh (Finance Manager) (34 Points)

18 October 2011

Hi,

I am an NRI staying in UAE. I have sold one property in India attracting Long Term Capital Gain (LTCG) tax for A.Y. 2012-13.

As per the ITR 3 when I am computing tax payable on LTCG (male assessee below 65 yrs) it is not deducting the minimum slab of180,000 from LTCG (it's computing tax payable @ 20% on LTCG). But when I am changing the status to "Resident" it is deducting180,000 from LTCG and applying 20% on net value [i.e. 20% on (LTCG minus180,000)].

Pls let me know whether the minimum slab is not deductable from LTCG in case of NRIs.

Shall I have to pay tax

a/ @ 20% on LTCG + 3% or

b/ @ 20% on (LTCG minus180,000) + 3%

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6 Replies

C.A SHASHANK GOYAL (Chartered Accountant) (362 Points)
Replied 18 October 2011

Hi , by virtue of the proviso to section 112 of income tax act ,1961 , only resident individual and huf is allowed to claim the benefit of slab rate i.e maximum amount not chargeable to tax in case of long term capital gain . You must not be having any other income and only and only income is long term capital gain so when you are providing with the residential status of resident it is adjusting with Rs 180000 while straightaway 20% tax will be levied without adjustment for limit .

2 Like

Suraj S (Audit Executive) (335 Points)
Replied 18 October 2011

Agree with Shashank.....

1 Like

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA) (7014 Points)
Replied 18 October 2011

Shashank has correctly pointed that as per proviso to sec. 112(1)(a) the benifit of basic exemption limit is only available to resident individuals & HUF and this was brought in Income Tax Act by an amendment by Finance Act,1994.

Anuj

+91-9810106211

femaquery @ gmail.com

2 Like

Rahul Suneja (CA-Final, CS-Exec) (215 Points)
Replied 18 October 2011

yes as per sec 112 of income tax act, only resident and huf are allowed to deduct from LTCG,STCG111A if the normal income is less than exemption limit but for NR there is no such provision

therefore your tax liability is 20%of LTCG +3%

1 Like

Subhankar Ghosh (Finance Manager) (34 Points)
Replied 18 October 2011

Thank you all for the valid input.

ankur (Properitor) (29 Points)
Replied 19 May 2012

Isn't for the NRI, section 115E is applicable over section 112 under which NRI has to pay 10% long term capital gain tax?

https://law.incometaxindia.gov.in/DIT/intnrcount.aspx

https://law.incometaxindia.gov.in/DIT/File_opener.aspx?fn=https://law.incometaxindia.gov.in/Directtaxlaws/act2005/section115e.htm

Tax on investment income and long-term capital gains.

115E. Where the total income of an assessee, being a non-resident Indian, includes—

(a) any income from investment or income from long-term capital gains of an asset other than a specified asset;

(b) income by way of long-term capital gains,

the tax payable by him shall be the aggregate of—

(i) the amount of income-tax calculated on the income in respect of investment income referred to in clause (a), if any, included in the total income, at the rate of twenty per cent;

(ii) the amount of income-tax calculated on the income by way of long-term capital gains referred to in clause (b), if any, included in the total income, at the rate of ten per cent; and

(iii) the amount of income-tax with which he would have been chargeable had his total income been reduced by the amount of income referred to in clauses (a) and (b).]