FAQ Capital Gain

Q-Is Rental Income of Property At Dubai taxable in India?
I am a Indian Citizen. I am going to buy a apartment in DUBAI.I can remit $100000 per year outside India. What will be the tax implications on the rental income that I will receive and on the capital gains tax. As per double taxation treaty India has with Dubai, I am liable to pay tax in India on the rentals income and capital gains tax.

The taxation on income under I T Act depends on residential status of the person and the Double Taxation Avoidance Agreement(DTAA) signed between India and another country. It is settled law that DTAA supersede I T Act if same is more beneficial to the tax payer. To know more about it , read this posting.

Regarding Rental Income Taxation
There is DTAA between India and UAE and Article 6 of the said agreement deals with rental income of an immovable property.
if you are Resident of India (contracting state) and having immovable in Dubai (Other state), house property is taxable only in UAE (other state). In other words, the income from rental of an immovable property in UAE is not taxable in India.
Capital Gains on Immovable Property.
Article 13 of DTAA deals with capital gains of a resident . It prescribes ,similar to article 6, that capital gains on sale of immovable property is taxable in the state where the property is situated.
Therefore, in nutshell, if you are resident in India, both rental incomes as well as capital gains on immovable property are taxable in Dubai.


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