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How TaxBuddy Simplified NRI Investment And Property Taxation Option In India

About the Case

Investing in India when you live abroad can be tricky, especially when it comes to property taxes and handling taxes in two different countries. This case study reveals how TaxBuddy helped Ms. Priya Rao, an NRI, sort out her investments and deal with tax challenges. Learn how TaxBuddy guided her to overcome dual taxation, complex calculations, compliance issues, and tax implications for her Indian property investments.

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Issues faced By

Ms Priya Rao

Dual taxation:

  • Ms. Rao was concerned about being taxed twice — once in the U.S. and again in India.

Complex Calculations:

  • With multiple income sources, Ms. Rao dreaded the complex calculations that lay ahead

Compliance Issues:

  • Meeting the diverse compliance requirements stemming from two different countries.

Tax Implications:

  • Tax Implications on Selling and Renting of property

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How TaxBuddy Helped

Dual Taxation:

  • TaxBuddy assisted her in avoiding dual taxation by leveraging the US-India Double Taxation Avoidance Agreement (DTAA).

  • They informed her about India's tax benefits, including a 30% standard deduction on rental income and interest deduction on her home loan.

  • Her tenant had deducted 30% TDS on her substantial rental income of Rs 400,000. TaxBuddy recommended filing an income tax return in India to claim a refund for the TDS.

  • In the US, they advised her to claim a foreign tax credit to prevent double taxation.

Complex Calculations:

  • The individual had multiple sources of income in the US, including a salary of $1,200,000 and rental income of $500,000. In India, she had rental income of Rs 500,000.

  • TaxBuddy ensured that both income sources in the US were accurately taxed and that tax relief was claimed on the rental income from her Indian property.

Complex Compliance:

  • TaxBuddy came to the rescue, making sure she remained compliant with tax regulations, both in the U.S. and in India.

  • TaxBuddy ensured compliance by reporting foreign assets (US property) in her Indian tax return.

  • In the U.S. return, they ensured the proper reporting of Indian property under foreign assets schedules, including rental income received and taxes paid in India to claim relief.

Tax Implications:

  • Ms. Rao chose to sell her property in India, fetching a sale price of 1.5 Crores. This resulted in a long-term capital gain of Rs 0.5 Crores, which is taxed at 10%.

  • To avoid taxation on capital gains, TaxBuddy advised her to reinvest the profits. She could do so by either purchasing a new capital asset under section 54 or acquiring specified assets under section 54EC.

  • TaxBuddy's recommendations on reinvesting profits improved her understanding of the tax landscape, providing her with a valuable strategy to reduce her tax liabilities on capital gains.

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The Conclusion: 

Ms Priya Rao

Tax saving Journey

TaxBuddy played a pivotal role in guiding Ms. Priya Rao through the intricate web of tax implications related to her Indian property investments, contributing to her ability to adeptly manage the complexities of Indian real estate taxation. As she looked back on her journey, Ms. Rao realized that the invaluable guidance provided by TaxBuddy not only empowered her to navigate these challenges effectively but also demonstrated that with the right support, what initially seemed like insurmountable obstacles could be transformed into opportunities, turning her dream of Indian real estate investment into a tangible and successful reality.

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