repatriating funds from sale of property
Repatriating Funds from the Sale of Indian Property to Canada: Legal and Tax Process
Introduction
Many Indians who have moved to Canada as permanent residents or citizens continue to own property in India. When such property is sold, one of the biggest concerns is how to repatriate sale proceeds from India to Canada legally while complying with Indian tax laws, RBI regulations, and Canadian tax reporting rules. The process involves understanding TDS on property sale, capital gains tax, Form 15CA/15CB, FEMA limits, and possible TDS refunds. This detailed FAQ guide explains every step NRIs in Canada need to know to safely transfer money from India to Canada without legal or tax complications.
Frequently Asked Questions (FAQs)
1. Can an NRI living in Canada repatriate property sale proceeds from India?
Short Answer: Yes, NRIs are legally allowed to repatriate sale proceeds.
Long Answer: Under FEMA (Foreign Exchange Management Act), NRIs can transfer money earned from the sale of Indian property to Canada, subject to limits, tax compliance, and proper documentation through authorised banks.
Long Answer: Under FEMA (Foreign Exchange Management Act), NRIs can transfer money earned from the sale of Indian property to Canada, subject to limits, tax compliance, and proper documentation through authorised banks.
2. Is there any limit on repatriating funds from India to Canada?
Short Answer: Yes, up to USD 1 million per financial year.
Long Answer: RBI allows NRIs to repatriate up to USD 1 million per financial year, including property sale proceeds, rental income, and other eligible assets.
Long Answer: RBI allows NRIs to repatriate up to USD 1 million per financial year, including property sale proceeds, rental income, and other eligible assets.
3. Do I need RBI approval to repatriate property sale money?
Short Answer: No, RBI approval is not required in most cases.
Long Answer: If the property was purchased legally and taxes are paid, repatriation can be done through authorised banks without separate RBI permission.
Long Answer: If the property was purchased legally and taxes are paid, repatriation can be done through authorised banks without separate RBI permission.
4. Which bank account should receive the sale proceeds in India?
Short Answer: NRO account.
Long Answer: Property sale proceeds must be credited to an NRO (Non-Resident Ordinary) account before repatriation to Canada.
Long Answer: Property sale proceeds must be credited to an NRO (Non-Resident Ordinary) account before repatriation to Canada.
5. Can money be directly transferred from buyer to my Canadian account?
Short Answer: No.
Long Answer: Indian regulations require the sale proceeds to first come into an Indian bank account (usually NRO) before outward remittance.
Long Answer: Indian regulations require the sale proceeds to first come into an Indian bank account (usually NRO) before outward remittance.
6. What is TDS on sale of property for NRIs?
Short Answer: TDS is mandatory and higher for NRIs.
Long Answer: Buyers must deduct TDS at 20% (plus surcharge and cess) for long-term capital gains and around 30% for short-term gains when purchasing property from an NRI.
Long Answer: Buyers must deduct TDS at 20% (plus surcharge and cess) for long-term capital gains and around 30% for short-term gains when purchasing property from an NRI.
7. Who is responsible for deducting TDS on NRI property sale?
Short Answer: The buyer.
Long Answer: The buyer is legally responsible for deducting and depositing TDS with the Indian Income Tax Department before paying the seller.
Long Answer: The buyer is legally responsible for deducting and depositing TDS with the Indian Income Tax Department before paying the seller.
8. What happens if the buyer does not deduct TDS?
Short Answer: It creates tax and legal issues.
Long Answer: Non-deduction can result in penalties, interest, and complications for both buyer and seller, delaying repatriation.
Long Answer: Non-deduction can result in penalties, interest, and complications for both buyer and seller, delaying repatriation.
9. Can I apply for a lower TDS certificate?
Short Answer: Yes.
Long Answer: NRIs can apply for a lower or nil TDS certificate under Section 197 to avoid excess tax deduction.
Long Answer: NRIs can apply for a lower or nil TDS certificate under Section 197 to avoid excess tax deduction.
10. What is Form 15CA and why is it required?
Short Answer: It declares tax compliance for remittance.
Long Answer: Form 15CA is an online declaration to the Income Tax Department confirming taxes have been paid before transferring money abroad.
Long Answer: Form 15CA is an online declaration to the Income Tax Department confirming taxes have been paid before transferring money abroad.
11. What is Form 15CB?
Short Answer: A CA-certified tax report.
Long Answer: Form 15CB is issued by a Chartered Accountant certifying capital gains calculation and tax compliance for repatriation.
Long Answer: Form 15CB is issued by a Chartered Accountant certifying capital gains calculation and tax compliance for repatriation.
12. Is Form 15CB mandatory for all remittances?
Short Answer: Mostly yes for property sales.
Long Answer: Banks usually require Form 15CB for large remittances arising from property sales to ensure tax compliance.
Long Answer: Banks usually require Form 15CB for large remittances arising from property sales to ensure tax compliance.
13. How is capital gains tax calculated on Indian property sale?
Short Answer: Based on holding period and indexed cost.
Long Answer: If held for more than 2 years, long-term capital gains apply with indexation benefits. Otherwise, gains are taxed as short-term income.
Long Answer: If held for more than 2 years, long-term capital gains apply with indexation benefits. Otherwise, gains are taxed as short-term income.
14. Can I claim a refund for excess TDS deducted?
Short Answer: Yes.
Long Answer: If TDS deducted is higher than actual tax liability, NRIs can claim a refund by filing an Indian income tax return.
Long Answer: If TDS deducted is higher than actual tax liability, NRIs can claim a refund by filing an Indian income tax return.
15. How long does TDS refund take for NRIs?
Short Answer: 6–12 months typically.
Long Answer: Refund timelines depend on return filing accuracy, processing time, and verification.
Long Answer: Refund timelines depend on return filing accuracy, processing time, and verification.
16. Can capital gains exemption reduce tax liability?
Short Answer: Yes.
Long Answer: Exemptions under Sections 54, 54EC, and 54F may apply if gains are reinvested as per rules.
Long Answer: Exemptions under Sections 54, 54EC, and 54F may apply if gains are reinvested as per rules.
17. Do I need to report this income in Canada?
Short Answer: Yes.
Long Answer: Canadian residents must report worldwide income, including Indian capital gains, while claiming foreign tax credits if applicable.
Long Answer: Canadian residents must report worldwide income, including Indian capital gains, while claiming foreign tax credits if applicable.
18. Will I be taxed twice in India and Canada?
Short Answer: No, due to DTAA.
Long Answer: The India–Canada DTAA allows you to claim credit for taxes paid in India against Canadian tax liability.
Long Answer: The India–Canada DTAA allows you to claim credit for taxes paid in India against Canadian tax liability.
19. Can joint property owners repatriate funds separately?
Short Answer: Yes.
Long Answer: Each co-owner can repatriate their respective share subject to individual USD limits.
Long Answer: Each co-owner can repatriate their respective share subject to individual USD limits.
20. What documents do banks ask for repatriation?
Short Answer: Sale deed, tax forms, and ID.
Long Answer: Banks require sale deed, PAN, Form 15CA/15CB, NRO statements, and passport/visa copies.
Long Answer: Banks require sale deed, PAN, Form 15CA/15CB, NRO statements, and passport/visa copies.
21. Can inherited property sale proceeds be repatriated?
Short Answer: Yes.
Long Answer: Inherited property proceeds can be repatriated after submitting inheritance proof and tax documents.
Long Answer: Inherited property proceeds can be repatriated after submitting inheritance proof and tax documents.
22. Is repatriation allowed from an NRE account?
Short Answer: No.
Long Answer: Property sale proceeds must go through an NRO account, not directly into NRE.
Long Answer: Property sale proceeds must go through an NRO account, not directly into NRE.
23. Can I repatriate money in multiple instalments?
Short Answer: Yes.
Long Answer: Repatriation can be done in tranches within the annual USD limit.
Long Answer: Repatriation can be done in tranches within the annual USD limit.
24. What exchange rate applies during repatriation?
Short Answer: Bank’s prevailing rate.
Long Answer: The exchange rate used is the bank’s remittance rate on the day of transfer.
Long Answer: The exchange rate used is the bank’s remittance rate on the day of transfer.
25. Are there any penalties for incorrect repatriation?
Short Answer: Yes.
Long Answer: Non-compliance with FEMA or tax laws may attract penalties and delays.
Long Answer: Non-compliance with FEMA or tax laws may attract penalties and delays.
26. Can power of attorney be used for repatriation?
Short Answer: Yes.
Long Answer: A registered POA holder in India can assist with paperwork and bank procedures.
Long Answer: A registered POA holder in India can assist with paperwork and bank procedures.
27. Is professional help recommended?
Short Answer: Strongly recommended.
Long Answer: A CA and cross-border tax advisor can prevent costly mistakes and delays.
Long Answer: A CA and cross-border tax advisor can prevent costly mistakes and delays.
28. Can I repatriate rental income along with sale proceeds?
Short Answer: Yes.
Long Answer: Rental income can also be repatriated after tax deduction within the USD limit.
Long Answer: Rental income can also be repatriated after tax deduction within the USD limit.
29. How long does the repatriation process take?
Short Answer: 1–3 weeks after documents.
Long Answer: Once documents are complete, banks usually process remittance within a few weeks.
Long Answer: Once documents are complete, banks usually process remittance within a few weeks.
30. What is the biggest mistake NRIs make during repatriation?
Short Answer: Ignoring tax planning.
Long Answer: Many NRIs overlook lower TDS certificates and DTAA benefits, resulting in blocked funds and delayed refunds.
Long Answer: Many NRIs overlook lower TDS certificates and DTAA benefits, resulting in blocked funds and delayed refunds.
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