Is there any tax on houses gifted to NRIs?

2 min read . Updated: 12 Sep 2022, 11:24 PM IST Archit Gupta

If you have sold a property which is situated in India, you may have to report capital gains from the sale of such a property in your ITR to be filed in India

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I am a non-resident Indian (NRI). My grandfather had gifted me two houses in 2017. Although at that time I was filing my income tax return (ITR) regularly every year, I forgot to mention the houses in the tax returns. What shall be the consequences when I sell these houses, and is there any remedy now for this mistake?

—Name withheld on request

If you have sold a property which is situated in India, you may have to report capital gains from the sale of such a property in your ITR to be filed in India.

Since this property has been held for a period exceeding two years, capital gains earned from such sale shall be considered as long term capital gains.

For the purpose of calculating capital gains, you are allowed to deduct the indexed cost of acquisition from the sale price. This can be calculated by applying Cost Inflation Index (CII) to your cost.

Prior to financial year 2019-20, the income tax act allowed a taxpayer to claim only one property as self-occupied. If a person held more than one self-occupied house property, they were required to report such property in their returns and pay tax on notional rent earned from one of such properties. On which property such tax must be paid was left to the taxpayer. In case you failed to report such notional rent and pay tax on it, you may consider visiting an income tax officer and check if it would be possible for you to file your return now. Unfortunately, you may have to deposit a penalty and interest on unpaid taxes.

My uncle is a UK citizen and had bought agricultural land in India in 2003 illegally. How can he rectify this?

—Name withheld on request

An NRI cannot purchase agricultural property without the Reserve Bank of India’s prior approval.

If any property is purchased in violation of Foreign Exchange Management Act (FEMA) laws, penalties may apply or such property may even be confiscated.

Archit Gupta is founder and chief executive officer, Clear.in.

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