By Courtney Trenwith
New Indian gov’t changes exemption on its 20% capital gains tax; will hit nationals buying property overseas
The number of Indian nationals buying property in the Gulf is expected to decline after the new government removed an exemption on capital gains tax for those buying property overseas.
Indians who sell property and buy another residence within two years, or within three years for newly built homes, are exempt from the 20 percent tax on capital gains – the profit made after taking into account inflation.
However, in releasing its first budget since being voted into office in May, Narenda Modi’s new government has amended a clause in the legislation to only allow the exemption when the subsequent property is bought in India.
The change could affect thousands of Indian nationals who have invested in the Gulf.
According to Dubai Land Department figures, about one-quarter of the $9.8bn invested in the emirate’s property market in 2012 was by Indian nationals, making them the highest foreign investors in the sector.
25% of a markets Buyrs/Sellers lose an incentive to invest into Dubai property market. Hmmm...that's not very good moving forward.
Question is, how many invested for tax relief purposes in the first place. When that question is answered we'll see what the real effect is over here. I would suggest far more than 50% invest for the tax incentive because without it...why invest here at all when India when India has its own robust property market...
This is a misleading report.
For indians or non resident Indians, there is no tax exemption on capital gains from sale of property held outside India. Income earned or capital gains generated outside Indian jurisdiction is not subject to any tax. Its not even reported.
It makes no sense for the Indian tax authorities to give such tax relief for properties owned outside India. Also the tax rules and laws primarily pertain to income generated within India and not outside.
This report is just another addition to the long list of negative news being unfairly associated with UAE Real Estate.