Introduction
The Indian government recently announced that it will start imposing a TCS of 20% on foreign remittance for purchasing overseas properties starting October 1, 2023. This law will affect real estate investors who wish to acquire international properties by increasing the total expenditure incurred in purchasing property overseas.
Key Considerations In Light Of The TCS Announcement
- Increased Barriers To Foreign Property Ownership The 20% TCS is likely to increase the cost of buying a foreign property and this may lower the affordability of many investors trying to buy overseas properties.
- Influence On Exports Of Indian Developers Due to increased cost of overseas properties resulting from the new tax Indian developers might find it difficult to sell the overseas properties to potential investors.
- Adoption of Renting Culture The increase in costs and taxation might lead the Indian population to consider renting foreign properties as opposed to outright buying them.
Investment Protection Strategies
- Try And Resolve TCS To The Seller Many investors will look at the added TCS as a point of negotiation with the sellers to try and convince sellers to decrease their asking price.
- Look Out For Countries With Which India Has DTAA
However specific clauses of the treaty may lead you to a tighter control over costs when purchasing property located within countries that have a DTAA agreement with India.
- Bring Down The TCS Liability By Taking Refund Of TCS
In order to make a claim for a tcs payment on the stamp tax on corporations, one must demonstrate that the necessary payment has already been made in relation to the real estate sold internationally.
For Investors
- TCS FTA sanction regime has an impact on your spending plan especially with respect to the areas of TCS.
- If so interested then submit an application for refund of TCS that incorporates tax stamped on properties sold in India.
Afterward
The TCS news will have a lot of changes for Indian investors going ahead to pursue foreign investment in real estate. This will require proper familiarization with the changes, planning of funds and determining avenues to ease the cost burdens.
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