Key Highlights
- NRIs senior citizens are not exempt from advance tax, unlike resident senior citizens.
- Foreigners can purchase property in India with certain prerequisites.
- Tax implications vary when buying property from an Indian or non-resident Indian seller.
his article addresses the tax obligations of senior citizens living abroad and the purchase of property in India by foreign citizens. It provides valuable insights into the advance tax requirements for NRIs and the conditions under which foreign citizens can buy residential property in India.
NRIs: Understanding Advance Tax Obligations
When it comes to tax obligations for senior citizens, living as a non-resident in India carries different rules. Here are the key points to remember:
Advance Tax for NRI Senior Citizens
Unlike resident senior citizens, NRIs are not exempt from paying advance tax. Under Indian tax law, advance tax is mandatory when the total tax liability exceeds ₹10,000 in a financial year. However, there is an exemption for resident senior citizens without business or professional income. If you lack business or professional income and are a resident, you're exempt, but as an NRI, this exemption doesn't apply. If your annual tax liability exceeds ₹10,000, you must pay advance tax quarterly.
Buying Property in India as a Foreign Citizen
Purchasing residential property in India as a foreign citizen is subject to specific regulations and tax implications:
Eligibility to Buy Property
Foreign citizens can buy property in India, provided they meet certain criteria. This includes holding an Overseas Citizen of India (OCI) card or becoming a person resident in India under FEMA. You must also not belong to the negative list of countries requiring prior approval from the Reserve Bank of India.
Tax Implications for Property Purchase
Tax implications vary depending on whether you're buying property from an Indian tax resident or a non-resident Indian (NRI) seller. If the seller is Indian, you'll need to deduct TDS (tax deducted at source) at 1% of the property value under Section 194IA of the Income Tax Act. For purchases from NRIs, the tax rate will be specified in the tax deduction certificate obtained from the tax office by the seller.
Additionally, if you own up to two properties in India, you can claim them as self-occupied properties, but you can still claim housing loan interest payments as a deduction, which may result in a loss under the "income from house property" category.
Understanding advance tax obligations for NRI senior citizens and the rules for purchasing property in India as a foreign citizen is crucial to ensure compliance with Indian tax and property laws. Always seek professional advice to navigate these complex regulations effectively.
