The Indian government recently announced that it will be imposing a 20% tax collected at source (TCS) on foreign remittances made by Indian citizens for the purchase of international property. This new rule will come into effect on October 1, 2023.
For real estate investors who are considering buying international property, this announcement is a significant development. The TCS will add an additional 20% to the cost of buying property overseas, which could make it more difficult for some people to afford to invest in international real estate.
However, there are a few things that real estate investors can do to minimize the impact of the TCS. For example, they can try to negotiate a lower purchase price with the property seller, or they can consider buying property in a country with which India has a double taxation avoidance agreement (DTAA).
In addition, real estate investors should be aware that they may be able to claim a refund on the TCS if they are able to prove that they have paid tax on the income earned from the sale of the international property. They can claim the refund by filing an income tax return with the Indian government.
Overall, the TCS announcement is a significant development for real estate investors. It is important to be aware of the new rules and to factor the TCS into your budget if you are considering buying property overseas.
Here are some of the key implications of the TCS announcement for real estate investors:
- The TCS will increase the cost of buying international property, which could make it more difficult for some people to afford to invest in international real estate.
- The TCS could make it more difficult for Indian developers to sell their properties overseas.
- The TCS could lead to an increase in the number of Indian citizens who choose to rent international property instead of buying it.
Here are some tips for real estate investors who are considering buying international property in light of the TCS announcement:
- Do your research and understand the new rules.
- Factor the TCS into your budget.
- Consider buying property in a country with which India has a DTAA.
- Be aware that you may be able to claim a refund on the TCS.
The TCS announcement is a significant development for real estate investors. It is important to be aware of the new rules and to factor the TCS into your budget if you are considering buying property overseas.
