Saving Mantra Blogs

Author: Financial Analyst

  • NRI Guide: Renting Property in India Step-by-Step

    Saving Mantra Blog: Step-by-Step Process for Renting Property for NRI in India

    Renting property in India as an NRI can be a profitable way to earn regular rental income. However, it involves compliance with legal, tax, and FEMA regulations to ensure smooth operation and repatriation of income.

    This guide provides a step-by-step process for NRIs to rent property in India effectively and legally.

    ✔ Step 1: Identify the Property and Tenants

    • Choose property suitable for residential or commercial renting
    • Decide rental type:
      • Long-term lease (≥11 months)
      • Short-term rental
    • Screen tenants carefully to avoid defaults or disputes

    ✔ Step 2: Understand FEMA Compliance

    • NRIs must comply with FEMA (Foreign Exchange Management Act):
      • Rent must be credited to NRO account
      • Repatriation of rental income limited to USD 1 million per financial year
      • Maintain records for RBI reporting if required

    ✔ Step 3: Draft Rental Agreement

    • Include key terms:
      • Rent amount, payment frequency, security deposit
      • Duration of lease, renewal and termination clauses
      • Responsibilities for maintenance, taxes, and utilities
    • Rent agreements should comply with Indian state laws

    Tip: Use a registered rental agreement for legal enforceability.

    ✔ Step 4: Legal Documentation

    Ensure the following documents are maintained:

    • Proof of property ownership (sale deed, title)
    • PAN card and NRI status proof
    • Tenancy agreement signed by landlord and tenant
    • Payment receipts for rent received

    ✔ Step 5: Tax Implications

    • Rental income is taxable in India under Income from House Property
    • TDS applies if rent exceeds ₹50,000 per month (Section 194IB)
    • NRIs must file ITR-2 and can claim deductions for:
      • Municipal taxes paid
      • Standard deduction of 30% of net annual rent

    ✔ Step 6: Collect Rent via NRO Account

    • All rental income should be routed through NRO account
    • Maintain clear records for:
      • Tax compliance
      • Bank and RBI reporting
    • Consider automated rent transfer for consistent payment

    ✔ Step 7: Property Management

    • NRIs may hire property managers or agencies to:
      • Collect rent
      • Maintain property
      • Handle tenant issues and legal disputes
    • Ensure regular inspection and maintenance to retain value

    ✔ Step 8: Repatriation of Rental Income

    • NRIs can transfer rent abroad via NRO/NRE accounts
    • Repatriation limit: USD 1 million per financial year
    • Submit necessary documents like:
      • TDS certificate
      • Form 15CA/15CB (if required)
      • Bank statement showing rental income

    ✔ Step 9: Maintain Records and File Taxes

    • Maintain records for 6 years:
      • Rental agreements, receipts, bank statements, TDS certificates
    • File annual Income Tax Return to claim deductions and report income

    FAQs – Renting Property for NRIs in India

    Q1: Can NRIs rent out property in India?
    A: Yes, NRIs can rent out residential or commercial property in India, complying with FEMA and tax regulations.

    Q2: Where should rental income be credited?
    A: Rental income should be credited to an NRO account, which can later be repatriated within FEMA limits.

    Q3: Are NRIs liable to pay tax on rental income?
    A: Yes, rental income is taxable under Income from House Property. Deductions include municipal taxes and 30% standard deduction.

    Q4: What documents are needed for renting property?
    A: Property ownership proof, PAN card, NRI status proof, tenancy agreement, and rent receipts.

    Q5: Can NRIs repatriate rental income abroad?
    A: Yes, up to USD 1 million per financial year via authorized bank accounts, complying with FEMA regulations.

    Conclusion

    Renting property in India is a profitable option for NRIs, but requires adherence to legal, tax, and FEMA regulations. Following this step-by-step process ensures smooth operations, secure rental income, and compliance with Indian laws.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal, tax, or investment advice. Rental laws, FEMA regulations, and tax provisions may change. NRIs should consult qualified professionals before renting property in India.

  • NRI Guide: Selling Property in India Step-by-Step

    Saving Mantra Blog: Step-by-Step Process for Selling Property for NRI in India

    Selling property in India as an NRI requires careful planning to comply with Income Tax, TDS, FEMA, and repatriation regulations. Proper understanding ensures legal compliance, optimized taxes, and smooth fund transfer abroad.

    This guide provides a step-by-step process for NRIs to sell property in India efficiently.

    ✔ Step 1: Determine the Type and Holding Period of Property

    • Residential property: House, apartment, or plot
    • Commercial property: Office, shop, or warehouse
    • Holding period:
      • Long-Term Capital Gains (LTCG): Held >24 months
      • Short-Term Capital Gains (STCG): Held ≤24 months

    Why it matters: Determines applicable capital gains tax rate and exemptions.

    ✔ Step 2: Compute Capital Gains

    • LTCG Tax: 20% with indexation for properties held >24 months
    • STCG Tax: Taxed at NRI slab rates for properties held ≤24 months
    • Exemptions available under:
      • Section 54 (reinvestment in residential property)
      • Section 54EC (investment in capital gains bonds)

    ✔ Step 3: TDS Deduction

    • TDS applies to NRI sellers under Section 195
    • Deductor (buyer) deducts TDS:
      • 1% for residential property above ₹50 lakhs
      • Higher rates for other categories
    • NRIs can apply for Lower/No TDS Certificate if actual tax is lower

    ✔ Step 4: FEMA Compliance

    • Ensure compliance with Foreign Exchange Management Act (FEMA):
      • Funds must be transferred via NRE/NRO accounts
      • Only proceeds from legally acquired property in India can be repatriated
      • Repatriation limit: USD 1 million per financial year

    ✔ Step 5: Repatriation of Sale Proceeds

    Steps for transferring funds abroad:

    1. Deduct TDS and pay applicable taxes
    2. Submit Form 15CA & 15CB (from a Chartered Accountant)
    3. Transfer proceeds via NRO/NRE account
    4. Follow RBI/FEMA guidelines for repatriation

    ✔ Step 6: Legal Documentation

    • Sale deed and registration with Sub-Registrar
    • Encumbrance certificate to ensure clear title
    • PAN card, Aadhaar, passport, and NRI proof
    • TDS certificates and bank statements

    Tip: Hire a legal expert for smooth property transfer.

    ✔ Step 7: File Income Tax Return

    • Report property sale in ITR-2 (NRIs with no business income)
    • Include:
      • Sale proceeds
      • Capital gains calculation
      • TDS deducted
      • Exemptions claimed
    • Filing ensures TDS credit or refund

    ✔ Step 8: Maintain Records

    Keep records for 6 years:

    • Sale deed, registration, and property documents
    • TDS certificates (Form 16B / Form 26AS)
    • Form 15CA/15CB
    • Bank statements showing credited sale proceeds

    FAQs – Selling Property for NRIs in India

    Q1: Are NRIs taxed on property sale in India?
    A: Yes. NRIs pay capital gains tax depending on holding period and exemptions.

    Q2: What is TDS under Section 195?
    A: Buyers deduct TDS at 1% for residential property above ₹50 lakhs; higher rates apply for other property types.

    Q3: Can NRIs repatriate the full sale proceeds abroad?
    A: Yes, up to USD 1 million per financial year, subject to FEMA compliance.

    Q4: What exemptions are available on LTCG?
    A: Exemptions under Section 54 (residential property reinvestment) and Section 54EC (capital gains bonds).

    Q5: What forms are needed for repatriation?
    A: Form 15CA & 15CB are required to transfer property sale proceeds abroad.

    Conclusion

    Selling property in India for NRIs requires careful capital gains computation, TDS compliance, FEMA adherence, and proper repatriation planning. Following this step-by-step guide ensures legal compliance, smooth fund transfer, and optimal tax management.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal, tax, or investment advice. Tax laws, FEMA regulations, and repatriation rules may change. NRIs should consult qualified professionals before selling property in India.

  • NRI Guide: Buying Term Insurance in India

    Saving Mantra Blog: Step-by-Step Process for NRI to Buy Term Insurance in India

    Term insurance is a cost-effective way for NRIs to secure their family’s financial future in India. Choosing the right policy requires understanding eligibility, documentation, premium structure, and legal compliance.

    This guide provides a step-by-step process for NRIs to buy term insurance in India.

    ✔ Step 1: Determine Insurance Requirements

    • Assess coverage needs based on:
      • Family financial security
      • Outstanding loans or liabilities
      • Children’s education and future expenses
    • Use insurance calculators to determine sum assured

    Tip: Opt for coverage that provides adequate protection without overpaying premiums.

    ✔ Step 2: Check Eligibility for NRIs

    • Age criteria: Typically 18–65 years
    • Residency: Must be an NRI residing abroad or in India temporarily
    • Health and lifestyle factors influence premium rates
    • Some insurers require a local Indian bank account

    ✔ Step 3: Choose the Policy Type

    • Level Term Insurance: Fixed sum assured throughout policy term
    • Increasing Term Insurance: Sum assured increases periodically
    • Return of Premium Term Plan: Returns premiums if insured survives the term

    Tip: Compare multiple insurers for premium rates, claim settlement ratios, and policy benefits.

    ✔ Step 4: Complete Documentation

    Required documents for NRI applicants:

    • Passport and Visa / OCI / PIO card
    • PAN card (mandatory for Indian tax compliance)
    • NRE/NRO bank account details for premium payment
    • Proof of residence abroad
    • Medical reports, if required

    ✔ Step 5: Medical Examination (if required)

    • Insurers may require health check-ups depending on:
      • Age
      • Sum assured
      • Medical history
    • Some policies offer no-medical insurance for lower coverage amounts

    ✔ Step 6: Application and Premium Payment

    • Submit online or offline application
    • Pay premium via NRE/NRO account or other acceptable methods
    • Choose policy term (typically 10–40 years)

    ✔ Step 7: Policy Issuance and Verification

    • After review, insurer issues policy document
    • Verify:
      • Sum assured
      • Premium amount and frequency
      • Policy term and beneficiaries

    ✔ Step 8: Nominee Selection and Record-Keeping

    • Name primary and contingent nominees
    • Keep digital and physical copies of the policy document
    • Regularly update contact information and beneficiary details

    ✔ Step 9: Understanding Claim Process

    • Death claim settlement is tax-free under Section 10(10D)
    • Submit policy document, death certificate, and nominee ID proof
    • Claims processed via Indian insurer or their overseas offices

    ✔ Step 10: Review Policy Periodically

    • Review insurance coverage every 2–3 years
    • Update coverage based on:
      • Family needs
      • Inflation
      • Change in residence or employment status

    FAQs – Buying Term Insurance for NRIs

    Q1: Can NRIs buy term insurance in India?
    A: Yes, most Indian insurers offer term insurance to NRIs residing abroad or in India temporarily.

    Q2: Are premiums for NRIs tax-deductible?
    A: Yes, premiums are eligible for deduction under Section 80C of the Income Tax Act if paid from an Indian bank account.

    Q3: What documents are required for NRIs?
    A: Passport, Visa/OCI/PIO card, PAN, NRE/NRO account, proof of residence abroad, and medical reports if required.

    Q4: Is medical check-up mandatory?
    A: Depends on age, sum assured, and insurer; some lower coverage policies do not require a medical test.

    Q5: How are claims settled for NRIs?
    A: Claims are processed by the insurer in India, requiring policy documents, death certificate, and nominee proof; settlement is tax-free under Section 10(10D).

    Conclusion

    Buying term insurance in India is a crucial step for NRIs to protect family and financial interests. By following this step-by-step guide, NRIs can ensure proper coverage, legal compliance, and hassle-free claims.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal, tax, or financial advice. Insurance regulations and tax laws may change. NRIs should consult qualified professionals before purchasing term insurance in India.

  • NRI Guide: Evaluating Real Estate Investment in India

    Saving Mantra Blog: Step-by-Step Process for NRI to Evaluate Investment in Real Estate in India

    Investing in Indian real estate can be lucrative for NRIs, but it requires careful evaluation of legal, financial, and tax factors. Proper assessment ensures secure investments, compliance with FEMA and Income Tax regulations, and maximized returns.

    This guide provides a step-by-step process for NRIs to evaluate real estate investments in India.

    ✔ Step 1: Determine Investment Objectives

    • Decide the purpose of investment:
      • Rental income
      • Capital appreciation
      • Vacation/retirement home
    • Define investment horizon and budget

    Tip: Align investment goals with financial plans and risk tolerance.

    ✔ Step 2: Choose the Type of Property

    • Residential property: Apartments, villas, plots
    • Commercial property: Office space, retail shops, warehouses
    • Land or agricultural property: NRIs cannot invest directly in agricultural land without RBI approval

    Check: Ensure property is eligible for NRI ownership under FEMA rules.

    ✔ Step 3: Legal Due Diligence

    • Verify property title and ownership documents
    • Check encumbrance certificate to ensure property is free from legal disputes
    • Ensure RERA registration for residential or commercial projects
    • Confirm approvals from municipal authorities

    Tip: Hire a trusted legal professional in India for verification.

    ✔ Step 4: Financial Evaluation

    • Calculate total investment cost including:
      • Property price
      • Stamp duty & registration
      • Maintenance & renovation costs
    • Estimate rental yield and expected capital appreciation
    • Evaluate financing options:
      • NRI home loans from Indian banks
      • Repayment feasibility and interest rates

    ✔ Step 5: Tax Implications

    • Rental income is taxable in India at NRI slab rates
    • Capital gains tax on property sale:
      • Long-Term Capital Gains (LTCG) for holding >24 months
      • Short-Term Capital Gains (STCG) for holding ≤24 months
    • TDS applies for NRIs when receiving rent or sale proceeds
    • Check for exemptions under Sections 54 & 54EC for LTCG

    ✔ Step 6: FEMA Compliance

    • NRIs can invest only in residential or commercial property
    • Funds must be remitted via NRE/NRO accounts through authorized dealer banks
    • Maintain records of investment and repatriation limits (USD 1 million per FY)

    ✔ Step 7: Assess Location & Market Trends

    • Evaluate location, infrastructure, and connectivity
    • Consider future development plans and urban growth
    • Study historical price trends and rental demand
    • Check builder reputation and past project performance

    ✔ Step 8: Risk Assessment

    • Political and regulatory risks
    • Market volatility and price corrections
    • Tenant default or property vacancy
    • Legal disputes or title issues

    Tip: Diversify investments and consider professional property management services.

    ✔ Step 9: Documentation & Final Purchase

    • Execute sale deed and registration
    • Obtain PAN, Aadhaar (if applicable), and NRE/NRO account details
    • Ensure stamp duty and registration paid correctly
    • Keep copies of all legal, tax, and FEMA compliance documents

    ✔ Step 10: Post-Purchase Management

    • Maintain records of rental income, expenses, and tax payments
    • Plan for future sale, repatriation of funds, or inheritance
    • Hire property management company if required for smooth operations

    FAQs – NRI Investment in Real Estate in India

    Q1: Can NRIs invest in agricultural land in India?
    A: No, direct investment in agricultural or plantation land is generally prohibited without RBI approval.

    Q2: What tax applies on rental income for NRIs?
    A: Rental income is taxable at NRI slab rates, with TDS applicable.

    Q3: How is capital gain taxed on property sale?
    A: LTCG (holding >24 months) taxed at 20% with indexation, STCG (≤24 months) taxed at normal slab rates.

    Q4: Can NRIs repatriate sale proceeds abroad?
    A: Yes, up to USD 1 million per financial year, via NRE/NRO accounts, complying with FEMA.

    Q5: Should NRIs hire a property manager?
    A: Yes, especially if the property is rented out or NRI resides abroad, to handle tenant and maintenance issues.

    Conclusion

    Evaluating real estate investment in India for NRIs requires careful legal, financial, tax, and FEMA compliance checks. Following this step-by-step guide ensures safe investment, optimal returns, and hassle-free property management.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal, tax, or investment advice. Property laws, FEMA regulations, and taxation may change. NRIs should consult qualified professionals before investing in Indian real estate.

  • NRI Guide: Estate Planning via Trust in India

    Saving Mantra Blog: Step-by-Step Process for Estate Planning through Trust for NRI

    Estate planning is crucial for NRIs to safeguard assets in India, ensure smooth inheritance, and minimize tax liabilities. Establishing a trust provides a structured framework to manage and distribute assets according to your wishes while maintaining privacy and legal protection.

    This guide explains the step-by-step process for NRIs to plan estates via trusts in India.

    ✔ Step 1: Understand the Purpose of a Trust

    • Trust is a legal arrangement where a settlor (you) transfers assets to a trustee
    • Trustee manages assets for the benefit of named beneficiaries
    • Benefits:
      • Ensures controlled asset distribution
      • Minimizes disputes among heirs
      • Provides tax planning opportunities
      • Maintains privacy and legal protection

    ✔ Step 2: Choose the Type of Trust

    1. Revocable Trust
      • Settlor can modify or revoke during lifetime
      • Flexibility in asset management
    2. Irrevocable Trust
      • Cannot be changed once created
      • Provides tax efficiency and asset protection
    3. Specific Purpose Trust
      • For charitable donations, education, or property management

    ✔ Step 3: Identify Assets for the Trust

    NRIs can transfer various Indian assets:

    • Immovable property (residential or commercial)
    • Bank accounts and fixed deposits
    • Shares, securities, and mutual funds
    • Business interests or partnership stakes

    Tip: Only assets legally owned in India can be included.

    ✔ Step 4: Draft the Trust Deed

    Trust deed should include:

    • Name and details of settlor, trustee, and beneficiaries
    • Purpose and objectives of the trust
    • Asset list and instructions for distribution
    • Powers and responsibilities of trustee
    • Terms for revocation (if revocable)

    Professional help: Engage an Indian lawyer familiar with trust laws.

    ✔ Step 5: Register the Trust

    • Registration under Indian Trusts Act, 1882 is mandatory for:
      • Trusts managing immovable property
      • Charitable or public trusts
    • Submit:
      • Trust deed
      • ID and address proofs of settlor and trustees
      • Registration fees

    Note: Registration makes the trust legally valid and enforceable.

    ✔ Step 6: Comply with Taxation Rules

    • Trust income may be taxed depending on type:
      • Revocable trusts: Income taxed in the hands of settlor
      • Irrevocable trusts: Income may be taxed at trust level or in the hands of beneficiaries
    • NRIs must report trust-related income in India via ITR-2 or ITR-3
    • Plan for capital gains, rental income, or interest income in India

    ✔ Step 7: Asset Transfer and Accounting

    • Transfer assets to trust via Indian bank accounts (NRE/NRO for NRIs)
    • Maintain accurate records and valuations
    • Ensure compliance with FEMA regulations for foreign investments

    ✔ Step 8: Trustee Management

    • Trustees manage assets per trust deed instructions
    • Duties include:
      • Asset maintenance and record-keeping
      • Filing tax returns
      • Distributing income/assets to beneficiaries

    ✔ Step 9: Review and Update the Trust

    • Periodically review trust structure and assets
    • Amend trust (if revocable) to reflect changes in:
      • Family circumstances
      • Tax laws
      • Asset portfolio

    FAQs – Estate Planning through Trust for NRIs

    Q1: Can NRIs create a trust in India?
    A: Yes. NRIs can establish trusts for assets they own in India, following Indian trust laws.

    Q2: What assets can be included in a trust?
    A: Movable and immovable property, bank deposits, shares, securities, and business interests owned in India.

    Q3: What is the difference between revocable and irrevocable trusts?
    A: Revocable trusts can be modified during the settlor’s lifetime, while irrevocable trusts cannot.

    Q4: Is registration of trust mandatory?
    A: Yes, especially for trusts holding immovable property or for charitable purposes.

    Q5: How is trust income taxed for NRIs?
    A: Income is taxed based on trust type: revocable (settlor taxed), irrevocable (taxed at trust or beneficiary level).

    Conclusion

    Establishing a trust is a powerful tool for NRI estate planning in India. By following this step-by-step guide—drafting a deed, registering the trust, transferring assets, and ensuring tax compliance—NRIs can secure assets, plan inheritance efficiently, and optimize tax liabilities.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal, tax, or investment advice. Trust laws, FEMA regulations, and tax provisions may change. NRIs should consult qualified professionals before creating trusts in India.

  • NRI Guide: Invest in Proprietorship/Partnership in India

    Saving Mantra Blog: Step-by-Step Process for Investment in Proprietorship Business/Partnership Firm in India

    NRIs looking to invest in proprietorship businesses or partnership firms in India must follow legal and regulatory requirements under FEMA, Income Tax, and business laws. Proper planning ensures smooth investment, compliance, and risk management.

    This guide explains the step-by-step process for NRIs to invest in proprietorship or partnership firms in India.

    ✔ Step 1: Determine the Type of Business Investment

    • Proprietorship Business:
      • Single-owner business
      • NRI can invest, but business remains under Indian resident ownership
    • Partnership Firm:
      • Multiple partners share profits and liabilities
      • NRI can invest as a partner, complying with FEMA regulations

    Note: NRIs cannot directly invest in proprietorship under their NRI status; investment is routed via NR account or Indian resident nominee.

    ✔ Step 2: Comply with FEMA Rules

    • Investments by NRIs in partnership firms or proprietorships fall under FEMA (Foreign Exchange Management Act)
    • Conditions:
      • Investment should be in permitted sectors
      • Funds transferred via NRE/NRO accounts through authorized dealer banks
      • Maintain proper documentation for RBI reporting

    ✔ Step 3: Draft Partnership Agreement (For Partnership Firm)

    • Include:
      • Roles, responsibilities, and profit-sharing ratio
      • Capital contribution by NRI and resident partners
      • Exit clauses, dispute resolution, and governance rules
    • Register partnership agreement with Registrar of Firms (optional but recommended)

    ✔ Step 4: Business Registration

    • Proprietorship Business:
      • Obtain GST registration if turnover exceeds threshold
      • Open current bank account in India
      • Obtain PAN and TAN
    • Partnership Firm:
      • Register under Indian Partnership Act, 1932
      • Obtain PAN, TAN, and GST registration
      • Maintain books of accounts

    ✔ Step 5: Tax Compliance

    • NRIs investing in businesses must comply with Income Tax Act:
      • Proprietorship income taxed as per individual slab rates
      • Partnership firm profits taxed at firm level, distributed profits may also attract tax
    • NRIs must report income from business in India in ITR-2 or ITR-3

    ✔ Step 6: Fund Transfer and Accounting

    • Transfer investment via NRE/NRO accounts
    • Maintain proper audit trails and bank statements
    • Ensure capital contribution matches partnership agreement

    ✔ Step 7: Operational Compliance

    • Maintain books of accounts as per Indian law
    • File annual income tax returns
    • Ensure compliance with GST, labor laws, and sector-specific regulations

    ✔ Step 8: Exit Strategy

    • Include buy-back or exit clauses in partnership agreement
    • Repay NRI investment via NRO/NRE accounts following FEMA guidelines
    • Tax implications on withdrawal or sale of share must be computed

    Conclusion

    Investing in proprietorship or partnership firms in India requires careful adherence to FEMA, Income Tax, registration, and operational compliance. Following this step-by-step guide ensures NRIs can invest efficiently while staying legally compliant.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal, tax, or investment advice. FEMA rules, tax laws, and business regulations may change. NRIs should consult qualified professionals before investing in Indian businesses.

  • NRI Guide: Sale of Movable Property in India

    Saving Mantra Blog: Sale Proceeds of Movable Property in India for NRIs

    NRIs selling movable property in India—such as shares, securities, jewelry, or other movable assets—must comply with taxation, TDS, FEMA, and repatriation rules. Proper planning ensures legal compliance and smooth fund transfer abroad.

    This guide provides a step-by-step process for NRIs managing sale proceeds of movable property in India.

    ✔ Step 1: Identify Movable Property

    Movable property includes:

    • Shares, mutual funds, and securities
    • Gold, jewelry, and bullion
    • Vehicles
    • Other tangible movable assets

    Note: Tax treatment varies depending on the type of asset.

    ✔ Step 2: Determine Capital Gains Tax

    Capital gains tax applies when movable property is sold:

    • Short-Term Capital Gains (STCG):
      • Assets held ≤36 months (for most movable property)
      • Taxed at normal slab rates or 15% for equity shares under STT
    • Long-Term Capital Gains (LTCG):
      • Assets held >36 months (e.g., gold, debt mutual funds)
      • Taxed at 20% with indexation
    • Exemptions:
      • Certain bonds, reinvestments, or specific securities (as per Income Tax Act)

    ✔ Step 3: TDS Deduction

    • Buyers or brokers may deduct TDS at source for NRIs:
      • Equity shares or mutual funds: 10% for LTCG exceeding ₹1 lakh
      • Other movable assets: appropriate TDS as per income type
    • NRIs can apply for Lower/No TDS Certificate under Section 197 if tax liability is lower

    ✔ Step 4: Comply with FEMA Rules

    • Sale proceeds of movable property are subject to FEMA regulations
    • Funds must be credited to NRO/NRE accounts for repatriation
    • Repatriation limit: USD 1 million per financial year
    • Ensure property was acquired legally by NRI

    ✔ Step 5: Repatriation of Sale Proceeds

    Steps to transfer funds abroad:

    1. Ensure TDS has been deducted and taxes paid
    2. Submit Form 15CA & 15CB certified by a Chartered Accountant
    3. Transfer proceeds via NRO/NRE accounts
    4. Follow RBI/FEMA guidelines to stay within repatriation limits

    ✔ Step 6: File Income Tax Return

    • NRIs must report sale proceeds in ITR-2 or ITR-3 depending on business/professional income
    • Include:
      • Sale proceeds and capital gains computation
      • TDS deducted
      • Any exemptions claimed
    • Filing ensures TDS credit or refund and compliance with Indian laws

    ✔ Step 7: Maintain Proper Records

    Keep all documents for at least 6 years:

    • Sale deeds, transaction statements, or broker notes
    • TDS certificates (Form 16A/26AS)
    • PAN, passport, and NRI proof
    • Form 15CA/15CB
    • Bank statements showing credited sale proceeds

    FAQs – Sale Proceeds of Movable Property for NRIs

    Q1: Are NRIs taxed on sale of movable property in India?
    A: Yes. Capital gains tax applies based on holding period and type of asset.

    Q2: What TDS applies for movable property sale?
    A: TDS varies:

    • 10% for equity LTCG above ₹1 lakh
    • Higher rates for other movable assets as per tax provisions

    Q3: Can NRIs repatriate full proceeds abroad?
    A: Yes, up to USD 1 million per financial year via authorized banks, subject to FEMA compliance.

    Q4: Are there exemptions for capital gains?
    A: Yes, certain reinvestments in specified bonds, assets, or securities may qualify for exemptions under Indian law.

    Q5: What forms are needed for repatriation?
    A: Form 15CA & Form 15CB are required for repatriation of movable property sale proceeds.

    Conclusion

    Selling movable property in India as an NRI requires careful tax computation, TDS deduction, FEMA compliance, and repatriation planning. Following these steps ensures legal compliance, smooth fund transfer, and optimal tax management.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal, tax, or investment advice. Tax laws, FEMA regulations, and repatriation rules may change. NRIs should consult qualified professionals before selling movable property in India.

  • NRI Guide: Sale of Property & Capital Gains in India

    Saving Mantra Blog: Sale Proceeds of Immovable Property in India for NRIs

    Selling property in India as an NRI involves capital gains taxation, TDS, FEMA compliance, and repatriation rules. Understanding these rules ensures legal compliance, tax optimization, and smooth fund transfer abroad.

    This guide explains the complete process for NRIs to manage sale proceeds of immovable property in India.

    ✔ Step 1: Identify Property Type & Holding Period

    • Long-Term Property: Held for > 24 months → Taxed as Long-Term Capital Gains (LTCG)
    • Short-Term Property: Held for ≤ 24 months → Taxed as Short-Term Capital Gains (STCG)

    Why it matters: Tax rate and applicable exemptions depend on the holding period.

    ✔ Step 2: Compute Capital Gains

    Long-Term Capital Gains (LTCG)

    • Taxed at 20% with indexation
    • Indexation adjusts purchase cost for inflation
    • Exemptions:
      • Section 54 – Reinvestment in residential property
      • Section 54EC – Investment in specified bonds

    Short-Term Capital Gains (STCG)

    • Taxed at normal income tax slab rates for NRIs

    Example:
    Property bought for ₹50 lakhs and sold for ₹1 crore after 5 years → LTCG = Sale price – Indexed cost of acquisition.

    ✔ Step 3: TDS Deduction

    • TDS under Section 195 applies to NRIs selling property in India:
      • 1% for residential property > ₹50 lakhs
      • Higher rates for other property types
    • Buyer deducts TDS before making payment
    • NRIs can apply for Lower/No TDS Certificate if actual tax liability is lower

    ✔ Step 4: FEMA and LRS Compliance

    • Sale proceeds are subject to FEMA rules for NRIs:
      • Repatriation limit: USD 1 million per financial year
      • Funds must be transferred via NRO/NRE accounts
      • Proof of property ownership and legal compliance required

    ✔ Step 5: Repatriation of Sale Proceeds

    Steps to repatriate funds abroad:

    1. Ensure TDS has been deducted and tax compliance completed
    2. Submit Form 15CA & 15CB (certificate from a Chartered Accountant)
    3. Transfer proceeds via NRO/NRE account
    4. Follow RBI/FEMA guidelines to stay within the USD 1 million repatriation limit

    ✔ Step 6: File Income Tax Return

    • File ITR-2 for NRIs if no business income; ITR-3 if there is business/professional income
    • Disclose:
      • Sale proceeds
      • Capital gains calculation
      • TDS deducted
    • Claim TDS credit or refund if applicable

    ✔ Step 7: Maintain Records

    Keep records for 6 years:

    • Sale deed and registration documents
    • Bank statements showing proceeds
    • TDS certificate (Form 16B / Form 26AS)
    • PAN, Aadhaar, passport, and NRI proof
    • Form 15CA/15CB

    These documents are crucial for audit or dispute resolution.

    FAQs – Sale Proceeds of Property for NRIs

    Q1: Are NRIs taxed on property sale in India?
    A: Yes. NRIs pay capital gains tax on property sold in India based on LTCG/STCG rules.

    Q2: What is TDS under Section 195 for NRIs?
    A: Buyers deduct TDS at 1% for residential property > ₹50 lakhs and at higher rates for other property types.

    Q3: Can NRIs repatriate full sale proceeds abroad?
    A: Yes, up to USD 1 million per financial year via authorized banks, subject to FEMA compliance.

    Q4: What exemptions are available for LTCG?
    A: Exemptions under Section 54 (residential property reinvestment) and Section 54EC (capital gains bonds) reduce tax liability.

    Q5: What forms are needed for repatriation?
    A: Form 15CA & Form 15CB are required for repatriating property sale proceeds abroad.

    Conclusion

    NRIs selling immovable property in India must manage capital gains tax, TDS, FEMA compliance, and repatriation carefully. Following this step-by-step process ensures legal compliance, smooth fund transfer, and optimal tax planning.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal, tax, or investment advice. Tax rates, FEMA rules, and repatriation limits may change. NRIs should consult qualified professionals before selling property in India.

  • Step-by-Step Guide to NGO Annual Package in India

    Introduction to NGO Annual Package

    Managing an NGO in India involves continuous legal, tax, accounting, and regulatory compliance throughout the year. An NGO Annual Package is a structured, bundled compliance solution that ensures end-to-end yearly compliance, reduces risks, and allows NGOs to focus on their social mission.

    This Saving Mantra guide explains the step-by-step process and scope of an NGO Annual Package in India, covering accounting, audit, income tax, registrations, reporting, and risk management under applicable laws.

    What Is an NGO Annual Package?

    An NGO Annual Package is a comprehensive yearly compliance and advisory plan designed for:

    • Charitable Trusts
    • Registered Societies
    • Section 8 Companies

    It integrates accounting, audit, income tax, registrations, filings, and advisory into one structured solution.

    Key Laws Covered Under NGO Annual Package

    An annual package typically ensures compliance with:

    • Income Tax Act, 1961
    • Companies Act, 2013 (for Section 8 Companies)
    • CSR Rules & MCA filings (where applicable)
    • Trust / Society state laws
    • Donor, CSR, and funding regulations

    Why NGOs Need an Annual Compliance Package

    • Avoid penalties and cancellation of registrations
    • Maintain 12AB and 80G validity
    • Ensure audit and filing readiness
    • Build donor and CSR credibility
    • Reduce compliance cost and effort
    • Get year-round professional support

    Step-by-Step Process of NGO Annual Package in India

    Step 1: NGO Compliance Health Check

    The process starts with:

    • Review of NGO structure and registrations
    • Status of 12AB, 80G, CSR-1, DARPAN, FCRA (if applicable)
    • Review of past filings and notices
    • Identification of compliance gaps

    Step 2: Annual Accounting & Bookkeeping

    Ongoing accounting support includes:

    • Monthly or quarterly bookkeeping
    • Project-wise and fund-wise accounting
    • Segregation of restricted and unrestricted funds
    • Bank reconciliation and voucher management

    Step 3: Audit & Financial Statements

    Annual package covers:

    • Preparation of Receipts & Payments Account
    • Income & Expenditure Account
    • Balance Sheet
    • Coordination for statutory and tax audit

    Step 4: Income Tax Return Filing

    Timely compliance includes:

    • Preparation and filing of NGO ITR
    • Disclosure of income application and accumulation
    • Filing of audit report (if applicable)

    This ensures continued tax exemption.

    Step 5: 12AB & 80G Compliance Management

    Annual monitoring of:

    • Validity of 12AB and 80G registrations
    • Renewal timelines
    • Compliance with Sections 11–13
    • Documentation and reporting requirements

    Step 6: Donation & Reporting Compliance

    Includes:

    • Filing Form 10BD (donation statement)
    • Issuance of Form 10BE to donors
    • Donor-wise and project-wise reporting

    Step 7: CSR & Funding Compliance (If Applicable)

    For CSR-linked NGOs:

    • CSR-1 compliance monitoring
    • Utilization certificates
    • Project reports and impact documentation
    • Corporate reporting support

    Step 8: Notice Handling & Advisory

    Annual package includes:

    • Handling income tax notices and defect memos
    • Drafting replies and clarifications
    • Advisory on compliance risks and governance

    Step 9: Compliance Calendar & Reviews

    • Annual compliance calendar setup
    • Periodic compliance reviews
    • Pre-audit and pre-filing checks
    • Risk mitigation planning

    What Is Included in a Typical NGO Annual Package?

    • Accounting & bookkeeping
    • Audit coordination
    • Income tax return filing
    • 12AB & 80G compliance
    • Donation reporting (10BD/10BE)
    • CSR & donor reporting
    • Advisory & notice handling

    Common Risks Without an Annual Package

    • Missed deadlines
    • Lapse of tax exemptions
    • Poor accounting and audit issues
    • Penalties and notices
    • Loss of donor and CSR trust

    How Saving Mantra Delivers NGO Annual Packages

    Saving Mantra provides customized NGO Annual Packages, including:

    • Dedicated compliance manager
    • Tech-enabled accounting & dashboards
    • Compliance calendar and reminders
    • End-to-end filing and advisory
    • Integration with CSR, FCRA, and donor needs

    Disclaimer

    This article is for informational purposes only and does not constitute legal, tax, or professional advice. Compliance requirements may vary based on NGO structure, size, and applicable laws. Readers are advised to consult qualified professionals before opting for any compliance package. Saving Mantra shall not be responsible for decisions taken based on this content.

  • Step-by-Step Guide to 12AA Registration in India

    Introduction to 12AA Registration

    12AA Registration was the foundational approval granted to NGOs under the Income Tax Act, 1961 to claim income tax exemption on charitable income. Although 12AA has now been replaced by 12AB, understanding the 12AA registration process remains important for legacy registrations, conversions, and compliance clarity.

    This Saving Mantra guide explains the step-by-step process for 12AA registration in India, its purpose, eligibility, documentation, and how it links with the current 12AB regime.

    What Is 12AA Registration?

    12AA registration:

    • Granted income tax exemption under Sections 11 & 12
    • Recognized NGOs as charitable entities
    • Was issued by the Income Tax Department
    • Required verification of charitable objects and genuineness of activities

    Existing 12AA registrations were later migrated to 12AB as per law amendments.

    Who Was Eligible for 12AA Registration?

    12AA registration applied to:

    • Charitable Trusts
    • Registered Societies
    • Section 8 Companies

    The NGO must have been formed solely for charitable purposes.

    Benefits of 12AA Registration

    • Exemption from income tax on surplus income
    • Eligibility to apply for 80G registration
    • Increased credibility with donors and institutions
    • Recognition as a charitable organization

    Eligibility Conditions for 12AA Registration

    To qualify, an NGO had to:

    • Be legally registered (Trust / Society / Section 8)
    • Have clearly defined charitable objectives
    • Not distribute profits or dividends
    • Maintain proper books of accounts
    • Carry out genuine charitable activities

    Step-by-Step Process for 12AA Registration in India

    Step 1: NGO Legal Registration

    The NGO must be registered under:

    • Indian Trusts Act
    • Societies Registration Act
    • Companies Act, 2013 (Section 8)

    Without legal registration, 12AA approval was not possible.

    Step 2: Prepare Required Documents

    Documents required included:

    • Registration certificate of NGO
    • Trust Deed / MOA & Bye-laws
    • PAN of NGO
    • Details of trustees / directors
    • Address proof of registered office
    • Activity report (if activities commenced)
    • Financial statements (if available)

    Step 3: File Application with Income Tax Department

    • Application was filed in prescribed form
    • Submitted to jurisdictional Income Tax authority
    • Included declaration of charitable intent

    Step 4: Verification & Inquiry

    The Income Tax Department examined:

    • Charitable nature of objectives
    • Genuineness of activities
    • Financial records and governance

    Clarifications or hearings could be conducted.

    Step 5: Grant of 12AA Certificate

    If satisfied:

    • 12AA registration certificate issued
    • Income tax exemption granted
    • NGO became eligible for 80G approval

    Time Required for 12AA Registration

    • Average timeline: 2 to 6 months
    • Depended on documentation and scrutiny

    Transition from 12AA to 12AB

    As per amended provisions:

    • All 12AA registrations were required to migrate to 12AB
    • 12AB introduced time-bound validity and renewal
    • NGOs must now comply with 12AB rules for exemption

    Common Reasons for 12AA Rejection (Earlier)

    • Non-charitable or vague objectives
    • No genuine activities
    • Incomplete documentation
    • Financial inconsistencies
    • Poor governance structure

    How Saving Mantra Helps NGOs

    Saving Mantra provides expert support for:

    • Understanding legacy 12AA compliance
    • Migration from 12AA to 12AB
    • Fresh 12AB registration & renewals
    • Income tax exemption advisory
    • End-to-end NGO compliance management

    Disclaimer

    This article is for informational purposes only and does not constitute legal or tax advice. Provisions under the Income Tax Act have evolved, and 12AA has been replaced by 12AB. Readers are advised to consult qualified professionals for current compliance requirements. Saving Mantra shall not be responsible for decisions taken based on this content.