Looking for some guidance regarding any tax implications related to building house for my parents. Here is the scenario:
- Few years ago, I purchased a plot (vacant land) in my mother's name. I assume the purchase will be considered a gift and hence not taxable for my mother. Since it was paid using after-tax income (I directly paid the seller), I don't think there was any tax implication for me.
- Now I want to build a house on that plot. I am in NRI status now. I will be paying for the construction - will directly be paying the builder/contractor. There is no loan involved. If I transfer money to my India NRO account and use that to fund the construction, will there be any tax implication? It is after-tax income. And since the funds will only reside in my account for a short period (before I transfer it to builder), there is no interest that I earn. Again, I presume there is no tax implication for my mother here.
- Now if my parents decide to rent out the property in the future, will the rental income be considered such (i.e. income from house property) and be taxed accordingly? In this case, since my mother will directly collect the house rent, I assume, she will have to pay the relevant taxes? And there will not be any tax implications for me?
Can you please confirm if these assumptions are true - or if there are any other considerations I should be aware of. Thanks, VS
CAclubindia
