Property sale in India - taxation advise

[can_in]

Hello everyone,

I am a PR in Canada. I have one property in India. I want to sell that property and use the money to buy a house here (in Canada).I have few queries:

Based on my research, I calculated the capital gain tax based on indexation. I used following formulae to calculate:

A) Indexed purchase price = Purchase Price X {CII for the year of sale (2008) / CII of the year of purchase (2015)}
B) Capital gain = Sale price – Index Purchase price
C) Tax with Indexation = Capital gain x 20%

My findings are as follows:

Value of B is coming out negative as the house value has dropped and been sold dirt cheap. I have ended up in capital loss instead of gain. I haven`t added property maintenance, upgrades etc. on this; this will further take the value to downwards i.e. negative.

Question:

1. Do I still need to pay any tax on the sale in India as per indexation, as per my calculation it’s going on negative side?
2. If I use same money in buying house in Canada, do I have to pay capital gain tax in Canada? Since, its on minus side in India.
3. Can I get the sale amount directly in my Canadian bank account from the buyer in India?
4. Any other suggestions are welcome

Thanks in advance!

 

[steaky]

If you have not yet established Canadian residency for tax purposes, then you don't need to worry to pay capital gain tax in Canada.

 

[chimney007]

The transaction results in a capital loss as per Indian Tax law. So no capital gains tax is payable in India.

For Canadian tax purposes, canadian tax is paid on world wide income. There is no indexation.

The cost of the property would be the market value of the property on the date you immigrated to India at the exchange rate prevalent on that date. So your Canadian capital gain/ (loss would be:

Sales value in Rs X Exchange rate on date of sale - Market value on date of immigration X exchange rate on date of immigration.

If this is personal listed property then you cannot set off any capital loss against future capital gains.