Category Archives: Tax

NRIs can remit upto $1 million on sale of property

After a sale of property and payment of appropriate taxes either through TDS during sale or advance payment of taxes, NRIs can remit up to $1 million USD.
NRIs have to produce documentary evidence of sale (sale deed, registration fees receipts, tax payment evidence) along with a certificate from an auditor to remit the amount back to their country of residence.
Any amount over $1 million requires special permission from RBI.

NRIs and Taxes

NRIs, your rental income for properties in India is subject to tax in India. While filing taxes you can take a standard 30% deduction on annual value of property, which includes the cost of maintaining the house. Other deductions are home loan interest paid, property and water taxes. Regarding filing of taxes, you don’t need to file until your income exceeds 2 lakhs annually.

Your interest from NRE account, dividend income and interest income from PPF is TAX EXEMPT.

For details on other taxes, check out this NRI Taxes link on Mint (a WSJ partner).

How to save on taxes on rental income

There are 3 ways to reduce your tax liability on rental income from your property.

Tax on rental income

  1. Property tax deduction. Property tax you pay in that year can be deducted from your rental income before paying taxes on it.
  2. Maintenance, Insurance, etc. Regardless of how much you spend on repairs or insurance, you can deduct a flat 30% of the rental income.
  3. Mortgage interest deduction. If you have a loan on the house, the interest paid can be deducted, but the max. deduction is restricted to 1.5 Lakhs.

Be sure to account for these before paying your taxes. Here’s the official Govt. of India site for further details.