Q1066. Is OCI mandatory to sell Ancestral Property in India?

Question: Long time to touch base. You have been of immeasurable help in several questions posed to you in the passed and now have one more this time. I request your advice and counsel: My cousins, Portuguese citizens and residents, own an ancestral house here in Goa. They wish to dispose of it through sale and have been repeatedly told - I do not know by whom - that they have to be OCIs to sell their real estate. My inquiries in the long past about similar circumstances clearly said that this requirement is NOT there. Has this changed now to being necessary? Secondly, I was told that the proceeds could be repatriated to anywhere in the world without any tax deduction Am I right? Thirdly, I was told that approval of the Reserve Bank of India would be required and that this was easily given? Please advise? Thanks and a Happy New Year to you.

Answer: Regarding your questions: 1. There is no requirement that I am aware of that states that OCI is mandatory to sell property in India. 2. Repatriation without any tax deduction is NOT possible. Repatriation of sale proceeds can be done only after payment of taxes such as capital gains tax. Inherited property is acquired without any cost to the inheritor. However, when the property is sold capital gains taxes come into play. The cost of the previous owner is considered to be the cost of acquiring the property and capital gain/loss is calculated accordingly. You will need a chartered accountant to fill the required forms specifying that taxes have been paid.

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Information by Virendar Chand