THE TAX SAVER FORMULA
If the objective of a Non-Resident Indian is to make investment in real estate, with the sole objective of making money by selling such real estate, then for such Non-Resident Indians, it is strongly recommended that they should not sell their real estate at least within three years of purchase of the real estate.
To make the things very simple and clear it may be noted that whenever the property whether commercial or residential is sold by a Non-Resident Indian, then just like Resident Individual income-tax is payable on the Capital Gains amount received by selling the real estate. In case the property is sold for holding it for a minimum period of three years, in that situation the Capital Gains arising to the Non-Resident Individual is known as Long-Term Capital Gain. While reversely if the real estate is sold within a period of less than three years from the date of purchase, in that situation the profit arising on such transaction is treated as Short-Term Capital Gain. Under the Income-tax Law Short-Term Capital Gain is liable to tax and is to be added with other income of the Non-Resident Indian.
Reversely, in case the property is sold after holding it for three years, it becomes Long-Term Capital Gain for which innumerable tax advantages can be achieved by a Non-Resident Indian.
Thus, it makes a sense for all Non-Resident Indians to purchase real estate in India and sell the same only after holding it for three long years. This small activity if implemented by the NRI in reality will help them to save a substantial amount of income-tax on their Long-Term Capital Gain.