India: Taxes and Costs
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Rental income tax is low to high in India
Effective Tax Rate on Rental Income |
|||
| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 8.1% | 19.3% | 21.1% |
| Click here to see a worked example | |||
Source: |
Disclaimer | ||
INDIVIDUAL TAXATION
Non-residents are taxed only on their Indian-sourced income. Married couples are assessed and taxed separately.
INCOME TAX
Income is taxed at progressive rates.
INCOME TAX |
|
| TAXABLE INCOME, INR (US$) | TAX RATE |
| Up to 150,000 (US$ 3,088) | nil |
| 150,000 - 300,000 (US$6,176) | 10% on band over US$3,088 |
| 300,000 - 500,000 (US$10,294) | 20% on band over US$6,176 |
| Over 500,000 (US$10,294) | 30% on all income over US$10,294 |
| Source: Global Property Guide | |
A surcharge of 10% of the total tax liability is applicable where the total income exceeds INR1,000,000 (US$20,588).
Education Cess
An education cess of 3% is levied on the total income tax liability.
RENTAL INCOME
Non-residents earning rental income are taxed at progressive rates. In case of co-ownership, both parties are taxable separately.
Income earned from leasing land, buildings, and furniture are subject to a non-final 15% withholding tax, levied on the gross rent. This tax is credited against the taxpayer’s total income tax liability.
Taxable income is computed on the basis of the actual rental value of the property, or the government-determined rental value, whichever is higher. A standard deduction of 30% is granted for repairs and collection charges. Interest payments relating to loans used for the construction, acquisition, and repairs of the property are also entirely deductible.
CAPITAL GAINS
Capital gains realized from selling real property are taxed at the standard income tax rates. Taxable capital gains are computed by deducting acquisition costs and incidental expenses from the gross sales proceeds.
Capital gains realized from real property are subject to non-final withholding taxes, levied on the gross sales proceeds. Short-term capital gains are subject to 10% withholding tax while long-term capital gains (holding period exceeds three years) are subject to 20% withholding tax. This tax is credited against the taxpayer’s total income tax liability.
Wealth Tax
Net wealth tax is levied at 1% on a taxpayer’s net assets if it exceeds INR1,500,000 (US$30,881). Net assets are computed by deducting debts relating to the properties against their aggregate value. The income tax authorities are generally responsible for assessing the property value. Self assessment is also possible but there are interests and penalties for defaults.
PROPERTY TAXATION
Property Tax
There is no comprehensive system of property taxation. Not only does it differ among the states, but it also varies between the municipalities within the states. For leased properties, property tax is levied on the annual rental value of the property. In Delhi, property taxes range from 6% to 10%.
India - more data and information
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Your Comments
posted by Kuljeet Dobe | 2008-03-25
Barrister, 196 Windsor Rd, Maidenhead, SL6 2DW
What is the position where funds came from the UK in British Sterling and was converted into Rupees and then the property was purchased in Rupees? Can that moeny be repatriated?
posted by jidesh kumar | 2008-04-06
lawyer, new delhi
Yes, the money can be repatriated, subject to certain foreign exchange guidelines and the form of the person/ entity that is bringing the money into India.Best, JideshH/P: 91 9811620150Jidesh Kumar.M.DManaging PartnerKing, Stubb
posted by Sanjay | 2008-05-06
I have just heard that tax on rental income in Mumbai is increasing. Does anyone know what the tax rate will be and and when will it come into force? I am an NRI.