ITR-2 Form queries answered: NRIs to report capital gains income

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Published: June 12, 2019 12:32:40 AM

As per Section 145, the taxpayer has the option to declare income either on accrual basis or cash basis at his/her choice but the same method should be used every year.

The capital gain on the sale of your ancestral property shall be calculated by deducting the indexed cost of acquisition from the sale proceeds.The capital gain on the sale of your ancestral property shall be calculated by deducting the indexed cost of acquisition from the sale proceeds.

I am an NRI. I sold my house in Hyderabad and received lump sum money. What are the forms that I need to fill up as I am not a tax payer in India?
– Balaji Rao
As you have sold your house property, the gain made thereon shall be considered long-term capital gains if you held the property for more than two years which shall be taxed at 20%, otherwise the gain shall be short term and shall be taxed at slab rate as applicable to you. You will need to report this income by filing your Income Tax Return in Form ITR 2 by July 31 of the year following the year in which you sold it.

Do we need to show our accrued interest income or paid interest (on FD) under the head of ‘income from other sources’ in ITR?
—Rajesh Verma
As per Section 145, the taxpayer has the option to declare income either on accrual basis or cash basis at his/her choice but the same method should be used every year. However, if the cash system is followed and TDS has been deducted by the payer on interest credited to you, such interest has to be offered as income mandatorily under Section 198.

I have two residential properties. One is self-occupied and another is let out. Which ITR form do I need to file?
—Nimesh Shah
Since you have two residential houses, of which one is let out and assuming that you do not have any business income, you have to file your ITR in Form ITR-2.

I have acquired immovable property as my share from the ancestral property (inherited by my parents in 1940 or so) in 2014. Now I have sold a part of it. How do I to calculate the capital gain?
—MFZ Adeni
The capital gain on the sale of your ancestral property shall be calculated by deducting the indexed cost of acquisition from the sale proceeds. The cost of acquisition shall be the higher of actual cost of purchase incurred by your ancestors or the fair market value as on 1st April 2001 which in most likelihood would be higher. Once you get the cost of acquisition, you can take the proportionate share for the part which you have sold in this year. The cost of acquisition should be indexed by multiplying it with the cost inflation index (CII) of the year of sale and then dividing the same by cost inflation index of FY 2001-02. If the property was sold in FY 2018-19, CII of 280 shall be used and if the sale is carried out in FY 2019-20, CII for the same has not been notified yet.

The writer is partner, Ashok Maheshwary & Associates LLP. Send your queries to epersonalfinance@expressindia.com

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