My husband and I are citizens of USA. My husband acquired a house in India as a gift from his parents. We sold the house and paid TDS. The balance amount has been deposited in our NRO account. To repatriate this amount, which is more than 5 lakhs from our NRO account to US bank, do we consider this amount as taxable and submit Part C of form 15 CA or consider it non-taxable and submit Part D of 15 CA?
1 Answer
You need to get a Chartered Accountant (CA) in India to certify that any amount being transferred from your NRO account to your US account is money on which all relevant tax payments have been made or withheld. The CA can also advise you of what your tax obligations are in India; you might or might not get a (small) tax refund if the tax deducted at source (TDS) amount is too large.
With respect to US taxes, the capital gains from the sale of the property are subject to Federal income tax and also State income tax, but on your Federal income tax return, you can claim a credit against the Federal income tax due for the tax withheld in India. If you get a refund of some part of the TDS in 2023 after the Indian tax year closes next March 31, 2023, then you have additional income to report on your 2023 US tax return.
answered Oct 23, 2022 at 18:52
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If I can use Part D, then it says we don’t have to submit 15CB and so no need for a CA in India. Only if the money repatriated is taxable the I have to submit both 15 CA and 15 CB. How do I figure out if this is taxable or not? All I know is we have paid TDS. Oct 23, 2022 at 21:47
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As a US citizen, your world-wide income is taxable income as far as the IRS is concerned regardless of whether it has been taxed in the country of receipt or not. If the income has been taxed in India, you can get a credit for the tax paid in India against the tax due to US. The question is "What are the capital gains from the sale of the property?" and that question can be answered by the CA whom you desperately wish to avoid. You received the property as a gift (gifts are not taxable income to the US recipient) and gifts from near relatives are not subject to gift tax in India. .... Oct 24, 2022 at 3:14
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But the question is: what is your basis in the property? The US taxes capital gains only whereas in India, you probably had TDS withheld at 22.8% of the sale price. So, you may be due some refund etc. You probably need a CA to file your Indian Income Tax return to get the refund, or just ignore the Indian Income Tax refund entirely if you wish and avoid the CA entirely. Oct 24, 2022 at 3:20
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