Capital Gains Tax Exemptions on Reinvestment
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Capital Gains Tax Exemptions on Reinvestment for NRIs – N.D. Savla & Associates
When Non-Resident Indians (NRIs) sell property, shares, or other assets in India, they may face significant capital gains tax liability. However, the Income-tax Act, 1961 provides exemptions if the capital gains are reinvested in specified assets within defined timelines. At N.D. Savla & Associates, we specialize in helping NRIs structure their reinvestments to claim capital gains tax exemptions, thereby reducing tax outflows while remaining compliant with Indian tax laws.
Overview
The main exemption provisions available to NRIs are:
Section 54: Exemption on sale of residential property if capital gains are reinvested in another residential property in India within 2 years (purchase) or 3 years (construction).
Section 54EC: Exemption on LTCG from sale of property if invested in notified bonds (NHAI/REC) within 6 months, subject to ₹50 lakh limit.
Section 54F: Exemption on LTCG from sale of any asset (other than a residential house) if the net consideration is invested in a residential property in India.
Features
End-to-end advisory on capital gains reinvestment options for NRIs
Assistance in claiming exemptions under Sections 54, 54EC, 54F
Compliance support for documentation and timelines to secure exemptions
Advisory on multiple property transactions and partial exemptions
Tax planning for maximum savings on LTCG from NRI property sales
Guidance on repatriation of exempt capital gains abroad under FEMA
Documents Required
Passport & PAN card
Original purchase deed and sale deed of property/asset
Proof of reinvestment:
New property purchase agreement / builder agreement
54EC bond allotment letter
Bank statements (NRE/NRO)
TDS certificates (Form 16A / Form 26AS)
Valuation reports (if applicable)
Procedure
Transaction Review – Identify the nature of capital gain (property, securities, or other assets).
Eligibility Check – Match the transaction with Section 54, 54EC, or 54F provisions.
Timeline Verification – Ensure reinvestment within prescribed time limits (2–3 years for property, 6 months for bonds).
Documentation – Collect reinvestment proofs (property papers, bond allotment).
Tax Computation – Recalculate liability after applying exemptions.
ITR Filing – File return reflecting exemption claim in capital gains schedules.
Repatriation Advisory – Assist in transferring exempt funds abroad under FEMA compliance.
Why This Matters
Many NRIs lose out on exemptions because of missed timelines, incomplete documentation, or lack of professional guidance. This results in higher capital gains tax liability and blocked funds. With N.D. Savla & Associates, your NRI capital gains reinvestment is structured carefully, ensuring maximum exemptions, smooth compliance, and efficient repatriation of sale proceeds.
