FILING OF INCOME TAX RETURN BY NRI

[Dinesh Kumar]

My friend is NRI for last 16 years. He never had any income in India. Therefore he has not filed any tax return. In 2004 he booked one flat for40 Lakhs. Construction-linked payments were made from his NRE/NRO a/cs average8 Lakhs for 5 years. Before taking the possession, he sold this booking to a resident buyer for 42 Lakhs in 2009.

How this gain of2 Lakhs will be treated ?

Long-term Capital Gain OR Short-term Capital Gain OR Income from Other Sources !!

No TDS has been deducted by the buyer. Nor he filed any tax return assuming that indexation factor and exchange loss will be adjusted in the cost price which will result in loss in the transaction.

If taxable, can he file return now. What penalties he can face or buyer can face.

Kindly advise.

Thanks

Dinesh

[CAGOPALJI AGRAWAL]

On the basis of facts given, prima-facie, it would be LTCG and no tax liability seems to arise.

AI Summary

NRI's Flat Booking Sale: Long-Term Capital Gain with No Tax Liability, Says CA Gopalji Agrawal. No TDS or Penalties. An individual inquired about the tax implications for their NRI friend who sold a flat booking in India. The friend, an NRI for 16 years with no prior Indian income, sold the booking for a 2 lakh gain. The query sought clarity on whether this gain would be considered a long-term or short-term capital gain, or income from other sources, and questioned the absence of TDS and potential penalties. A respondent, CA Gopalji Agrawal, indicated that it appears to be a long-term capital gain with no apparent tax liability.