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Indexation available on foreighn asset

s kaushik (proprietor) (42 Points)

27 February 2015

An assessee holds a house propery in any foreighn county; acquired when when he was NRI. Now his status is Resident and want to dispose it off. Wheather he is entitle for indexation?

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Raphael (Chartered Accountant) (214 Points)
Replied 27 February 2015

Dear Friend,

The immovable asset being a capital asset and presuming it is held for more than 36 months, it can be considered as Long Term Capital Asset and hence indexation benefit is available. Now, as for taxability there are 2 points to be considered:

1. Is he a Resident but Not ordinary resident - If so then he will not be subject to taxataion in india as this is a foriegn asset and hence will be taxable only in the country in which the asset is situated. Hence income tax is - NIL

2. If he is a resident and ordinary resident - his global income is also taxable in India. Hence, he should pay taxes in India for the capital gain after taking indexation benefit. Here too the country in which the asset is situated will charge taxes. This tax paid can be claimed as relief under the provisions of double taxation avoidance agreement between India and the respective country.

Hope this meets your need.

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