House construction

How to declare the construction costs of a house?

I built a 3300 square foot house in Kerala in 2010 at a cost of 1 crore, using funds from my non-residential external account (NRE). Payments were made through the banks to my brother, who took care of the construction.

Now I plan to sell this house. Since there are no documented documents for the construction cost, how will I handle it on my tax return to account for the capital gain?

— Narayanan Kutty

A taxpayer is allowed to deduct the cost of construction from the selling price of the house.

When the house has been built, the taxpayer must be able to fully justify the cost of acquisition by producing invoices/receipts etc. for the money spent on the construction. If you have a record of the money spent, you should be allowed to claim it as a building cost.

After obtaining permanent resident status/citizenship in a foreign country, can I transfer all my money from banks/financial institutions here to my foreign bank account? If so, what are the procedures or documents needed to carry out these transactions?

I am currently an ordinary resident of India, currently on a temporary visit to the United States.

— Name masked on request

If you become a Non-Resident Indian (NRI) and wish to repatriate your money held in India, you must comply with certain rules of the RBI.

In accordance with these rules, you are authorized to repatriate your balance held on the NRE account. However, in the case of NRO accounts, there is a cap of $1 million per fiscal year. However, you must ensure that tax has been properly deducted/paid from any income that has been credited to these accounts.

You may also need to obtain a statement from a chartered accountant certifying the nature of the balance to be repatriated with a statement that the tax has been duly paid on such amount.

Archit Gupta is Founder and Managing Director of Clear.in.

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