I have a property in India which I am going to sell soon

When I was in India last summer, state bank suggested me to open capital gain saving account in SBI

I think person has 2-3 financial years. If he is not re-investing same money, then has to pay taxes in India

As I already gave my brother POA to sell property, so only question is how to open Capital Gain saving account

How this account is different than regular saving account or NRO account ?

I tried to check those details in SBI website, no information or forms are available

If at all I decided to bring those money in Canada, what are the implications
Do I need to pay taxes ?
How much money we are allowed to bring in Canada ?

My status is on PR for last 3-4 years

Did anyone went through this process ?

I do banking with SBI. This is the first time I am hearing abt capital gain saving account. May be the person is trying to get you to open an account with them. It is common for the banks to catch NRIs.

Say that u sell for Rs. 50 lakhs and buy something for Rs. 30 lakhs. The remaining Rs. 20 lakhs is subjected to CG. There are some exemptions u can claim including the value of the proeprty u sold, indexing, etc. Get a CA to do the calculations and determine the CG tax. That's what I did. Paid abt Rs. 3.75 lakhs in CG. U dont have to go to SBI.

KM

Whatever is capital Gain, invest that amount in RBI bonds/Govt Bonds for 3 years and save CG tax. They give you 5 to 6 % p.a Interest. You also have an option of reinvesting in property within one year then, you don't have to pay tax nor invest in bonds. But you have to file IT returns and declare within 6 months of sale of property.

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The best way to find yourself is to lose yourself in the service of others.”
Mahatma Gandhi

I will provide you here with a table for the Cost of Living Index and explain a little and you will have to get the help of an accountant or a Auditor there in India to get all or most of the money into Canada. (Upto a Million Dollars an Year and each year)

http://www.taxguru.in/income-tax/cost-inflation-index-for-financial-year-2009-10-and-assessment-year-2010-11-notified.html

Say your friend bought the house in 1981, 1st of April, and the value then say was a Rs.100/- and then sold it today for Rs.632, then he does not pay any Capital Gains Tax. Anything over and above that could be sheltered up to a sum of 50 Lakhs. That is a whopping sum. If he has gains that are more than that, then he has to pay taxes on the gains or to avoid taxes on that, s/he buys another property and shelters it and holds onto it for another four years and derives a little gains on that, so on and so forth. You can juggle with the table to see what the tax break he will get.


Freddie.

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Most of us buy and sell properties and move up into a bigger place. But after moving out of India, when we sell we make a gain on the sale called the Capital Gains.

This Capital Gain can be sheltered by anyone who wants to live in India by BUYING another property, called re-investing it into another property. There by saving the Capital Gains tax.

But for anyone who wants to cash in the Capital Gains he can do so by using the table provided in the link above. To understand it you will have to get some able help from a qualified knowledgeable accountant there living near by**.

Currently the property values shooting up, anyone can easily make a Capital Gain of 50 lakhs. It is this Capital Gains that one wants to shelter and not pay tax on it.

For this Government of India has brought out Electricity Board Bonds which pay about 5.5% (Might have gone higher in the past budget) and salt it away for a period of THREE years and take it all to Canada after that 3 yr period.. There is tax on the interest portion at the Indian End and we can claim relief for the same there in India for a sum of 1.6 lakhs by filing a tax return and having paid the taxes there, can also claim relief at the Canadian end here. (Income tax here.) Prior to this they had PWD Bonds. Prior to that they had Railway bonds.

An individual has to pay tax only on any Capital Gains made over and above the 50 Lakhs (Selling Price minus the Buying Price. Providing you with a relief on the selling price by the Inflationery Index as noted above in the LINK) Rupee has lost its buying Power.

Freddie.

** There are Accountants who know the sale price in the nearby locality for a property that is in the vicinity close by and will provide you with a written evaluation of the same for a FEE+.

+ Fees are paid in two forms one with a cheque...and ...

If you do not want to pay the 3.5 Lakh in taxes, you can do so by buying another property with it or with a higher amount and hold on to it for a period of THREE YEARS. There are locations where you can buy 'a lot' for that price and build on it or hold it.

Dear fellow CDs

Thanks for this new and very inforative topic, and all the information provided.

But I still wonder is there any CG savings account in SBI, If yes is there any LOCK-IN period for this type account?

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Enjoy Happiness -- Happy from India

I dont think there is any CG account with SBI or lock in process. As gopalpai pointed out, u can invest in bonds. But that has ot be done within 6 months. Bonds will be locked for 5-6 yrs.

KM

Most of us who worked in India have a PAN CARD. If you do not have one then apply and get one. It takes about Three to Four Weeks to get it. That is another process.

Your Accountant after completion of a sale of the house, will provide you with a statement of expenses etc., The Capital gain that arises out of the sale is documented by him as such. With the cheque in hand and the statement to accompany that , you approach a banker for the investment. That Banker in India will invest it into the Gov.Of India Bonds, (That is the only instrument that I know) the Bank buys it from the Government. This specific account is called the CAPITAL GAINS ACCOUNT.

Sorry it was past my bed time and I completed the last post and fell asleep right there in the chair. Nice to see your posts after I just got up. I am continuing where I left off. Thank God the thought process is still in tact and is in continuum.

Some want to take it out of the country and at the end of Three Years. You can withdraw the whole amount and the Bank Manager will help you repatriate that sum, Principal and Interest, in Foreign Exchange to Canada or any other Country of your choice.

Some who want to invest the same into India can do so within the first Six months and defray the Capital Gains Taxes, with the purchase of a already built home. The sum invested will be equal to the receipt from the previous sale or more.

Some who want to build with the same will have to buy a LOT and get a builder to do so within the FIRST two years. He also gets the Six Month period for the search of a lot etc., and trhe completion date will have to be within the TWO Year Period.

Hope this helps you.

Freddie.