Stamp Duty and Registration: Your First Big Step

No matter where you’re buying, the first tax you’ll face is stamp duty. Think of it as your ticket to legally own the property. In Mysuru, Karnataka, you’re looking at around 5-6% of the property’s market value. Add to that 1% for registration charges. Yes, that’s right—stamp duty and registration charges are a must. Without them, your purchase isn`t legally recognized! Please keep checking the official governement website ; https://igr.karnataka.gov.in/ for the latest information on the fees.

TDS: Pay Attention to This if You’re Buying from an NRI!

This is where things get a bit more specific. If you’re buying land from a fellow NRI, you’re going to have to deal with TDS (Tax Deducted at Source). Why? Because the Indian government wants to make sure taxes are paid on any profit the seller makes from the sale. For most transactions involving NRIs, TDS can be 20% on long-term capital gains or even 30% on short-term gains. This is critical if you want to avoid getting into a tax mess later.

But here’s the good news: if the seller is an Indian resident and the property is worth more than 50 lakh, the TDS is just 1% of the property value. It’s far more manageable!

What About GST?

Here’s where it gets a bit tricky. If you’re buying an under-construction property, you’ll need to shell out 5% GST. But if you’re investing in land or a completed project? No GST! That’s right—you can skip this one completely in those cases.

Planning for the Future: What Happens When You Sell?

Hold onto your property for more than two years? Congrats—you’ll only pay 20% long-term capital gains tax, and you even get indexation benefits to adjust for inflation! Sell earlier, and you’re looking at short-term capital gains tax, which can go up to 30% based on your income tax slab. If you’re thinking of flipping the property for a quick gain, be prepared for that hit.

Tips to Make the Process Smoother

1. Set Up NRE/NRO Accounts: All your real estate transactions should go through your Non-Resident External (NRE) or Non-Resident Ordinary (NRO) account. This keeps things clean and easy for both tax purposes and repatriation of funds later.

2. Use a Power of Attorney (PoA): If you can’t be there in person for every step of the buying process, give someone you trust PoA. They can handle registration, sign documents, and do the legwork while you’re abroad.

3. Consult a Tax Advisor: It’s always a good idea to consult a professional who understands the Foreign Exchange Management Act (FEMA) and tax laws for NRIs. This ensures you stay compliant and avoid unnecessary fines or legal trouble.