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 NRI Related FAQs 
for Starlit Suites

Category 4 of 4

This section of Starlit Suites FAQs covers NRI (Non Resident Indian) related questions & aspects and if after going through this section, you do not find answers to your queries or need more clarity on other aspects of this investment, we highly recommend you view our 3 other categories of FAQs as listed on the main FAQ page as doing so will give you tremendous confidence and belief in this unique investment asset in India.

If you still cannot find answers to your questions from this section, please feel free to contact us (click here for contact details) and we will be glad to answer the same.

Question 1

Being an NRI / PIO / OCI, do I pay taxes on this rental income and if yes, how much do I pay, how do I pay such tax & do I enjoy any tax breaks / benefits?

1. RENTAL INCOME ARISING IN INDIA IS TAXABLE IN INDIA

  • As an NRI, you are required to pay taxes on any income arising in India and hence income from this property too will be taxed in India, as per the overall tax slab / rate that you fall into for that particular year.
  • For your idea, the current tax slabs applicable to an NRI are as below (these figures may change from time to time and hence you are requested to check the Income Tax Department’s website to know latest applicable tax slabs) :
     – 0 to 2,50,000 : No tax
     – 2,50,001 to 5,00,000 : 10%
     – 5,00,001 to 10,00,000 : 20%
     – Above 10,00,000 : 30%

2. NO DOUBLE TAXATION OF INCOME

  • Since India has Double Tax Avoidance Agreement (DTAA), with over 127 countries (including major ones like USA, UK, Singapore, Australia, European countries, Middle Eastern Countries, and more), you will not be taxed again in your country of residence when you repatriate this income (i.e. you will not be taxed TWICE, that is once in India and once in your country of residence).
  • But you may have to pay the differential tax if any, incase you fall into a higher tax bracket in your country of residence than what you have paid in India. That is, if you have paid tax in India at 30% slab but you fall in the 40% tax slab in your country of residence, you will have to pay the differential tax of 10% in your country of residence.

3. TAX DEDUCTED AT SOURCE

  • Incase of NRI, operator is obliged to deduct Tax at Source (TDS) at the rate of 30.9% irrespective of which tax slab you fall into.
  • At the end of each financial year, you can claim for a reimbursement of tax incase your overall tax liability for that year is less than what has already been deducted at source by the operator for that particular year.

4. TAX DEDUCTIONS & BENEFITS

  • The total / gross rental income received by you is not fully taxable as following deductions are allowed while calculating the taxable value of rental income :
    Standard deduction of 30% of total Income : That is, if you earn Rs.100 per month as rental income, Rs.30 is considered to be tax free / deduction and only Rs.70 is taxable / added to your total taxable income.
  • Municipal taxes (i.e, Property Tax) paid to the local authority;
  • Interest paid on a loan taken for construction / purchase of the property;
  • Deduction of Pre-EMI / Pre-construction period interest paid on the home loan (this is available as deduction in five instalments from year subsequent to construction completion year).
  • Repayment of principal amount of home loan taken for such property (maximum deduction allowed under this section is Rs.1.5 lakh).
  • If the property is jointly held, then the income and deductions can be availed by each co-owner based on the respective shareholding in proportion mentioned in the purchase deed or agreement.

5. ASSISTANCE IN FILING YOUR TAXES & REPATRIATION

  • Filing your taxes and claiming for a refund (if applicable) is a very simple process that can be done over the internet and with the help of a chartered accountant in India.
  • We will be glad to connect you to a highly seasoned Chartered Accountant in India who has helped many of our NRI clients in the last few years in filing their taxes online.
  • Please reach out to our team member who is in touch with you or alternatively, write to us at office@gcglobal.in incase you want to be connected to the accountant who can help you both with filing your taxes and also with repatriating your money from India back to your country of residence.

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Question 2

Since I am an NRI / PIO / OCI, are there any tax implications or any restrictions with respect to my property rights (i.e. ability to buy, hold and sell property)?

TAX IMPLICATIONS

  • There are no special tax implications when you invest in property as an NRI or foreign citizen. For any money earned in India (either as rental income or as capital gains when you sell your property), you will pay applicable taxes in India and post that, the entire money can be repatriated to your home country.
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  • Close to 120 countries including US, UK, Australia, Singapore and many more have a Double Taxation Avoidance Agreement (DTAA) with India which means you don’t have to pay taxes once again on the money that you repatriate to your home country (i.e. once you taxes in India, that money is tax free in your home country).
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  • Incase you are in higher tax bracket, you will only pay the differential amount in your home country. That is, if you have paid 30% taxes in India and if you fall in 35% tax bracket in your home country, you will only have to pay 5% in your home country as the differential tax and not the entire 35% again, thus avoiding double taxation of your profits.

IMPLICATIONS ON YOUR PROPERTY RIGHTS

  • Even if you are an NRI (i.e. if you are citizen of a country other than India), you will be treated as a Person of Indian Origin (PIO) and will be allowed to continue buying, owning and selling property in India without any restriction.
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  • Incase you were previously an Indian citizen and eventually took up citizenship of another country, you will be allowed to continue owning property that you previously purchased and can also continue buying and selling new properties in the future.
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  • The only restriction is that as an NRI or IS citizen, you are not allowed to buy AGRICULTURAL LAND. This is the only restriction as otherwise, everything else remains the same.

REPATRIATION

  • As an NRI/PIO, you are allowed to repatriate upto $1 Million per person per financial year for an unlimited number of properties and hence, you can continue to invest in India without worrying about your money getting stuck in India.
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  • As a couple, you can repatriate upto $2 million per year.
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  • Repatriating money back to your home country is now a very simple and stress free process and can be done over the internet.
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  • From the time you decide to repatriate your money, it will take a maximum of 10 to 15 working days for money to reach your home country.
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  • As explained above, once you pay taxes in India, you will NOT be taxed again on the same income in the country of your residence and hence need not bother about double taxation.

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Question 3

How do I file my taxes / returns in India? Can you please introduce me to a Chartered Accountant or Auditor who can help me with it?

  • Filing your taxes and claiming for a refund (if applicable) is a very simple process that can be done over the internet and with the help of a chartered accountant in India.
    .
  • We will be glad to connect you to a highly seasoned Chartered Accountant in India who has helped many of our NRI clients in the last few years in filing their taxes online.
    .
  • Please reach out to our team member who is in touch with you or alternatively, write to us at office@gcglobal.in incase you want to be connected to the accountant who can help you both with filing your taxes and also with repatriating your money from India back to your country of residence.
    CA Krishnamurthy (based out of Bangalore)
    Mobile : +91 9341228317
    email : caspkmurthy@gmail.com

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 Other FAQ Categories 

To learn more, we encourage you to read our other FAQ sections as shown below :

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