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Sale of Flat in URBANA - Income Tax matters

Presently, URBANA is the tallest residential complex ever built in Kolkata and in the entire Eastern India. Currently, it has five towers of 45 storeys and two towers of 40 storeys. Eco-friendliness is the key feature of the complex, making it the city’s first green residential area. With its own sewage pumping station and sewage treatment plant, waste water from all the buildings will be treated and recycled for gardening and washing purposes. Rainwater harvesting will be a salient feature of the complex. A car park wide enough for 5,000 cars is there. Besides, a centralized refuse container collects and dispose off the waste generated by residents,. This project also has 100,000 square feet of residential club with all modern amenities, 10 acres of Central Park, decent length swimming pool, temperature controlled indoor pool, servant’s quarter provisions with every flat, VRF Air conditioning, Video door phone, Air conditioned design lobby and four high-speed elevators in each tower.

Bengal NRI Complex Limited, the mother company of URBANA is a joint enterprise of the government of West Bengal with the Shrachi, Emami, Sureka, MKJ, JB and Nahata Groups. Over the last couple of decades, these names have been associated with most of the city’s landmark buildings and complexes. The township that has made its mark on Kolkata's skyline with Urbana. Urbana is set amidst lush greenery, acres of wide open spaces and organized landscaped areas enhance the features of the home of its residents, while creating privacy and eliminating the multitude of neighborhood noise.
A complete real-estate destination, Urbana, offering independent homes and lavish apartments, has created the life one always desires to possess, having features, facilities and amenities at par with international standards. Urbana is armed with an exclusive Residents’ clubhouse with endless entertainment options.

URBANA for Non-Resident Indian’s:- As the name of the company suggests and also because of the international facilities within the complex, one can assume that majorly NRI’s were the targeted customers for this project. Many non- resident Indians have invested in this project. However, NRI’s may sale their apartment for many reasons, earning good profit being one of them. Keeping it in mind, this blog has been written to make you aware about the income tax and withholding Tax (TDS – Tax Deducted at source) the NRI seller should know about and also the buyer of the property from the Non-resident should be aware of.

Our Flat or house in India is considered as a Capital asset and when we sell this capital asset we need to pay capital gains Tax. If the property is sold within 2 years of purchase, then the assessee incurs a short term capital gain and if the property is sold after 2 years then the assessee may get long term capital gains.
1. Rate of Income Tax in case of short term falls under the normal slab i.e. progressive rates of taxation. And the gain is calculated by subtracting the purchase price and related/ incidental expenses from the sale value.
2. Rate of Income Tax in case of Long Term capital gains is 20% with indexation.

Indexation is a concept which is related to the present value of money.  Value of Rs. 100/- today is more than the value of Rs. 100/- after one year as there is inflation in our country. So every year the Income Tax department comes out with an indexation chart. E.g. The indexation index of FY 2001-02 is 100 and that of 2018-19 is 280. Therefore if an asset was purchased for Rs. 100/- in the FY 2001-02, its relevant cost value for the FY 2018-19 is Rs. 280/- which will get deducted from the sale value to  compute capital gains.

The rate of Income Tax on capital gains is same in case of resident Indians as well as Non-resident Indians (NRI’s). The difference lies on the rate of TDS to be deducted by the buyer.
 - If the seller is a resident Indian and the value of the property is more than Rs. 50 lakhs, then the applicable TDS section will be Sec 194IA and buyer needs to deduct TDS @ 1% and issue the TDS certificate in Form 16B.
 - Whereas, if the seller of the property is a NRI, then sec 195 will be applicable and the rate of TDS will be 20.6% and if the value of the property is more than Rs. 1cr, then the rate of TDS including surcharge will be 22.66%.

Many a times it has been seen that the amount of TDS exceeds the calculated Capital Gains which becomes a good reason to break the deal.

Now, the good news is that, the NRI can apply to his Income Tax assessing officer in Form-13 along with other supporting documents for a Certificate of non deduction or lower deduction of TDS by requesting him that the TDS should only be deducted on the calculated Capital Gains, if any and not on the Sale Value. The NRI will require to submit his sale agreement and purchase deed copies, Capital Gains calculation sheet, PAN card, Income tax return of previous years if any, bank statements  and other related documents to assessing officer with the request letter.

Further good news is that the NRI can save this TDS on computed capital Gains also by:-
a)      Investing this Long Term capital gains in another house property within 2 years;
b)      Investing in REC & NHAI bonds (Upto Rs. 50 Lakhs) which has a lock-in period of 3 years.

NRI’s can now remit this money from sale proceeds back to his country by taking a certificate from his Chartered Accountant in Form 15CB and then filing Form 15CA. Alternatively, he can keep the money in Indian NRO account is he doesn’t want to repatriate it abroad.

Contact us at or +91 7604033340 if you want us to represent your case to the Income Tax department or if any further expert opinion specific to your case is required. Thank You!


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