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NRI/PIO/OCI Definition & General Guidelines
CAPITAL GAINS TAX ON NRI/PIO/OCI
Capital Gains Tax CGT

Does Capital Gains Tax (CGT) apply to NRI/PIO/OCI?

Yes. Long-term and short-term capital gains are taxable in the hands of non-residents.

How is Rate of CGT computed?

Type of asset: Assets like house property, land and building, jewellery, development rights etc.

Rate of tax deduction at source (TDS)

  • Long term 20.6%
  • Short term 30.9%

Exemption available (only for long term capital gains)

The long term capital gains arising on sale of a residential house can be invested in buying/constructing another residential house, within the prescribed time. The exemption is restricted to the amount of capital gains or amount invested in new residential house, whichever is lower If the amount of capital gains is invested in bonds of National Highways Authority of India (NHAI) or Rural Electrification Corporation, then the entire capital gains is exempted, else the proportionate gain is exempted. As per the financial budget 2007-08, a cap of Rs. 50 lakhs has been imposed on investment that can be made in capital tax saving bonds.

How does Double Taxation Avoidance Agreement work in the context of CGT paid in India on the foreign tax treatment?

In case the non-resident pays any tax on capital gains arising in India, he would normally be able to obtain a tax credit in respect of the taxes paid in India in the home country, because the income in India would also be included in the country of tax residence. The amount of the tax credit as also the basis of computing the tax credit that can be claimed are specified in the respective country’s DTAA and is also dependent on the laws of the home country where the tax payer is a tax resident.