Q.957 Capital gain tax in UK if

property sold in India without

capital gain

Question: Hi Please help me with the following question Capital gains tax calculation in India is nicely explained in your book. The Capital gains tax calculation in UK is different then in India So if an NRI wants to repatriate the money to UK from the sale of a property in India, how can he calculate the tax due in UK Will it be ok to show the UK government the tax paid in India and the tax liability ends or the UK taxation needs to be applied to it In my situation i might not have any capital gains tax paid in India, as the current house price i would get would be well within the price as per the original price i paid and including the factor of house index.. This would be classified under Long term capital gains tax So if i dont have to pay any tax in India. will there be tax due in UK..whether i repatriate that money or not ... Please let me know as i need to plan accordingly Regards Hemant Gujrati Answer: DTAA allows credit for tax paid in the other country. For explanation purposes let’s use an example: • Suppose tax in a foreign country works out to be £1000. When declaring the same gain in UK, let’s assume that the tax works out to be £1100. Then after getting credit under DTAA for the £1000 already paid, UK tax liability is reduced to £100. o Suppose using the above example, the tax in UK was less than what had already been paid. No amount would be refunded in UK, but there would be no further tax liability in UK. Capital gains as a result of the sale of property are taxed when a profit is made on the sale. The gain is taxed and not the amount you receive. So if there is no gain from the sale transaction, then capital gains does not apply. Here again let me make another clarification with example of another scenario. Suppose there is a capital gain in India from the sale of property for a UK resident. However, instead of paying the capital gains tax, the gain is invested in India to save the entire capital gains amount which results in no capital gains tax in India. In such a case, capital gains tax would still apply in UK. In UK you don’t pay capital gains tax on the full amount of the gain [if there is a gain] as everyone has a yearly tax-free allowance: £11,100 for the tax year 2016-17. Also note that some capital gains are tax free, for example the sale of your main home. This website can only provide general information. You should consult with an accountant in UK to get advice on applicable taxes. Using a professional tax accountant in the long run will save you money.