tag:blogger.com,1999:blog-7036721709697976873.post3119728522631169211..comments2023-09-01T23:33:35.514-07:00Comments on SavingsFunda: Why and How NRI Should open NPS (National Pension Scheme) Accountjavin paulhttp://www.blogger.com/profile/15028902221295732276noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7036721709697976873.post-3177477728517549142016-12-08T00:03:01.007-08:002016-12-08T00:03:01.007-08:00How to calculate long term capital gain on propert...How to calculate long term capital gain on property/house sale with example. <br />Yes, both NRIs and Resident can remit the money obtained by selling properties in India, but you have to take a couple of things in your mind. For example, the sale proceed amount must be deposited into NRO account, it cannot be deposited into NRE account. Similarly, you may be liable to pay the short term or long term capital gains while selling property situated in India. If you are selling the property within 3 years of purchase then you need to pay short tem capital gain and if you are selling the house after 3 years then you have to pay long term capital gains i India. In case you have inherited the property then the date of purchase and price of purchase of previous owner will be used for calculation. <br /><br />The long term capital gains are taxed @ rate of 20% while short term capital gains are taxed at th applicable income tax slab rates for the NRI. Long term capital gain on property sale is not easy to calculate because you need to first calcualte the indexation factor, which is the CII of year of the sale divided by the CII of the year of purachese. <br /><br />Once you calcualte the indexation factory, you can calculate the indexed cost of property purchase. The long term capital gain is the difference between the indexed cost of purchase and the sale price.<br /><br />For example, if you have bought the property in 10 lakh in the year 2005 and now selling it on 50 lakh, then here is the formula for calculating long term capital gain on your property sale:<br /><br />Cost Inflation Index, CII= Index for financial year 2016-17/Index for financial year 2005-2006 = 1125/480 = 2.343<br /><br />Indexed cost of purchase = CII x Purchase Price = 2.343 x 10,00,000 = 23,43,000<br /><br />Long-term capital gain = Selling Price – Indexed cost = 50,00,000 – 21,30,000 = Rs. 26,56,250<br /><br />Tax on capital gain = 20% of 26,56,250 = 5,31,250<br /><br /><br />Here is one more example, of how long term capital gain taxes are calculated using indexation:<br /><br />Suppose you purchased a plot of land in 2007 for Rs.20,00,000, which you sold in 2011 for Rs.60,00,000. What will be the actual profit you made on this sale? 40 lakhs? No, lower than that, let's see how it works<br /><br />Cost of property purchase – 2007 20,00,000<br />Sale price of property – 2011 60,00,000<br />CII – 2007 551<br />CII – 2011 785<br />Indexed Cost Price 20,00,000 * (785/551) = Rs.26,42,468<br />Long Term Capital gain 60,00,000 – 26,42,468 = Rs.33,57,531<br /><br />So, your actual profits after selling the property is not Rs. 40,00,000. It is only Rs. 33,57,531. This is the amount you need to consider for calculating your taxes. The long term capital gain would be 20% of that amount because you sold the property after 3 years i.e. Rs 6,71,506.<br /><br />So, you can see that calculation of long term capital gain on property sell is not that streight forward and it depends upon Cost Inflation Index. Here is the full list of CFI. <br /><br />The cost of inflation index (CII) has been notified by the Central Government every year by notification in the Official Gazette. The cost of acquisition/improvement will, thus, be indexed with reference the rate of applicable for the relevant year. The Cost of Inflation Index is mainly used to compute Long term capital gain.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7036721709697976873.post-32290011553214699602016-04-11T11:33:12.000-07:002016-04-11T11:33:12.000-07:00Hi Brother !! Here is a question and request you t...Hi Brother !! Here is a question and request you to look into and advise in the matter<br />i.e. in the eventuality, after opening and continuing the NPS account as NRI in view of what is stated bove, if the NRI becomes a RESIDENT of USA/Canada in course of time, then what will be the position of [i] the NPS account [ii] the funds so far remited into NPS account [iii] other incidential effects for the NPS account. KINDLY ADVISE. Thank you. = svgd1951@gmail.comRayaluhttps://www.blogger.com/profile/16411761406721580512noreply@blogger.com