Due to a delayed registry, the NRI home buyer is granted relief from paying income tax on the imposed income of Rs 40.45 lakh.

The Income Tax Appellate Tribunal (ITAT) recently issued a ruling on January 8, 2024, granting relief to a non-resident Indian (NRI). The NRI was subjected to an imposed income of Rs 40.45 lakh by the Income Tax Assessing Officer (AO). The individual had acquired a flat in West Mumbai back in 2010 for Rs 1.82 crore, with the stamp duty amounting to Rs 1.4 crore at the time. However, when the flat was registered in 2013, the stamp duty value had increased to Rs 2.2245 crore.

The Delhi bench of the Income-tax Appellate Tribunal (ITAT) has exempted a non-resident Indian (NRI) from tax obligations in a case concerning the underpayment of stamp duty related to the purchase of a flat in Mumbai. The payment period was extended over three years. The assessing officer (AO) had increased the individual’s income by Rs 40.45 lakh, alleging underpayment of stamp duty, leading to additional tax liability.

Shyamkumar Madhavdas Chugh, residing in Sharjah, United Arab Emirates (UAE), bought a flat in West Mumbai for Rs 1.82 crore, with the sale agreement executed on June 21, 2010. Payment for the flat commenced on June 17, 2010, extending over three years until August 14, 2013. The registration of the flat was completed on August 13, 2013.

The AO pursues income tax upon the individual’s flat purchase.

In this case, the AO imposed income tax on Chugh upon purchasing the flat. The ITAT order states, “AO added Rs 40.45 lakh to the assessee’s income under section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961 for the flat’s purchase consideration

NRI Homebuyer

An NRI home buyer is granted relief from paying income tax on the imposed income of Rs 40.45 lakh due to a delayed registry.

The Delhi ITAT exempted an NRI from tax in a Mumbai flat purchase case where stamp duty was underpaid over a three-year payment period. The AO increased income by Rs 40.45 lakh for alleged stamp duty underpayment.

1. The flat’s stamp duty value is treated as ‘income’ if received without consideration.

2. Difference between consideration and stamp duty treated as ‘income’ if consideration less than stamp duty by over Rs 50,000.

How does Auriga accounting help in providing NRI home buyer relief?

1. Tax Planning and Compliance: Auriga Accounting can help NRI homebuyers navigate the complex tax regulations in both their home country and the country where they are purchasing property. This includes understanding and optimizing tax implications on property transactions, rental income, and capital gains.
2. Foreign Exchange Regulations: NRIs may face certain restrictions or regulations related to foreign exchange while purchasing property in their home country. Auriga Accounting can guide on complying with these regulations and optimizing currency transactions.
3. Legal Compliance: NRI property transactions often involve legal complexities. Auriga Accounting may work closely with legal experts to ensure that all transactions comply with local laws and regulations.
4. Financial Planning: Auriga AccountingAssistance in financial planning, including advice on funding the property purchase, obtaining mortgages, and managing finances efficiently.
5. Property Management: Auriga Accounting might offer services related to property management, including rent collection, financial reporting, and compliance with local property regulations.