Sale of immovable property in India is taxed in the year of sale

—Name withheld on request

Sale of any immovable property in India shall be taxable in the year of sale. Any immovable asset held for more than 24 months is classified as a long-term capital asset and the taxable capital gains on them will be the less the expense on sale, the lower the indexed cost of acquisition, the lower the indexed cost of improvement. Long Term Capital Gains (LTCG) is taxable at 20% (plus applicable surcharges and health and education cess). LTCG can be claimed as exemption from income tax to the extent the profit is reinvested in specified bonds in India (within six months from the date of transfer). discount is limited to ₹50 lakh per financial year and the bonds will be closed for five years. Alternatively, LTCG can be claimed as an exemption if the capital gains are invested in a residential house in India. If LTCG India does not invest by the due date of filing tax return (July 31), you will have to deposit the amount of capital gains in the Capital Gains Account Scheme (not later than the due date of filing of tax return) and subsequently Withdraw this amount for reinvestment in a new residential house within the stipulated period (two/three years, as the case may be). If the entire amount is not reinvested or credited to the scheme, the remaining portion of the LTCG will be taxed. As you are a citizen of Singapore, if LTCG on sale of flat in India is taxable as per tax laws in Singapore, you can claim foreign tax credit under applicable provisions of Double Taxation Avoidance Agreement between India and Singapore Huh.

Sonu Iyer is EY India’s Tax Partner and People Advisory Services Leader.