Non resident Indians (NRIs) – Indian citizens resident outside India – can buy as many residential or commercial Properties In India as they like.  However, if you are considering buying a Property In India there are taxation implications should you be aware of.

Our guide looks at the unusual income tax regime surrounding owning a Property In India.

Owning more than one property will result in an income tax liability

If you own more than one house in India, only one of them will be deemed as ‘self occupied’ and there is no income tax on this property.

Any other properties (whether you rent them or not) will be treated as if you do rent them.  You have to calculate the rental income from the other properties based on certain valuations prescribed by the income tax rules and pay the appropriate tax on this ‘income’.

This rule also applies to properties outside India.  Vikas Vasal, Executive Director of KPMG India told The Times of India: "At the time of drafting the Income Tax Act, one did not envisage a situation where an Indian would own properties overseas. But now, more and more Indians are settling abroad. So from the reading of the Act, the rule of 'more than one property' will apply to global properties."

If you are an NRI and own only one property globally and that property is in India, you would not have to pay any income tax on it in India.

When you buy overseas property  you will usually also be acquiring tax obligations in that country. Many countries require international real estate buyers to register themselves with the local tax authority before they can complete their purchase.

However, let’s assume that you are an NRI resident in the Uk. You own and live in a house in the Uk.  You also own a house Property In India.  Even if you do not rent out the Indian property, you would have to pay income tax on deemed rent in India.

You should also bear in mind that even if you have inherited a Property In India and that is not your only property, you would still have to pay tax on deemed income.

Source : Homegofast.com