Australia NRI selling India property: ATO CGT, 50% discount and India DTAA
Australian tax residents selling Indian property must report the capital gain on their ATO individual tax return. India charges 12.5% LTCG plus buyer TDS at 12.5%. Australia's 50% CGT discount applies if the property was held 12+ months (Australian residents only — non-residents do not get the discount). The Australia-India DTAA and the Foreign Income Tax Offset (FITO) credit India LTCG against ATO tax. Net ATO liability is typically the difference between ATO marginal rate on 50% of the gain and India's 12.5% on the full gain.
50% CGT discount applies for Australian residents; India LTCG credited as FITO
Australian tax residents selling India property: India levies 12.5% LTCG and 12.5% buyer TDS. Australia taxes 50% of the AUD-converted capital gain at the marginal rate (after applying the 50% CGT discount for assets held 12+ months). The India LTCG tax paid is claimed as a Foreign Income Tax Offset (FITO) on the ATO return, capped at the ATO tax on the same income. The effective additional ATO liability after FITO is typically low for properties held long-term.
Key points
- 50% CGT discount for Australian residents holding 12+ months — Australian tax residents get a 50% CGT discount on gains from assets held 12+ months — including India property. Only 50% of the AUD gain enters ATO taxable income.
- FITO: India LTCG credited against ATO tax — India LTCG tax paid (converted to AUD) is claimed as FITO on the ATO return, reducing the ATO tax payable on the India property gain.
- Non-residents lose the 50% discount — If you are an Australian non-resident at the time of sale, the 50% CGT discount is not available — the full gain is taxable at the applicable non-resident rate.
ATO CGT calculation for India property
AUD cost base: Convert original purchase price + improvement costs + selling expenses to AUD at RBA rates on each relevant date.
AUD capital gain: AUD proceeds minus AUD cost base.
50% discount: If held 12+ months and you are an Australian resident, apply 50% discount — halve the AUD gain.
FITO claim: India LTCG tax paid (12.5% of INR gain, converted to AUD) is claimed as FITO. Limited to ATO tax on the India-source gain.
Net ATO liability: typically marginal rate × 50% of AUD gain minus FITO. For high-income taxpayers (45% marginal), the effective rate is 22.5% on the discounted gain, minus the India 12.5% FITO — approximately 10.5% additional ATO tax.
Australia-India DTAA Article 13
Both countries retain the right to tax India property gains for their residents. The DTAA does not exempt Australian residents from India LTCG.
FITO provides the relief mechanism — it is not a DTAA-specific provision but a general Australian unilateral mechanism for foreign tax credits.
DTAA mutual agreement procedure: if India and Australia disagree on the treatment of a particular transaction, the MAP process under Article 25 is available.
Frequently asked questions
Am I an Australian resident or non-resident for the year of the India property sale?
Australian residency is based on domicile, the 183-day test and your intention to reside. If you lived in Australia for most of the year, you are likely a resident. Temporary visa holders in Australia on departure may be non-resident. Tax residency status determines whether the 50% CGT discount applies.
Is the India buyer TDS credited on the ATO return?
No. The buyer TDS is credited against your India ITR tax liability. Only the final India LTCG tax (after TDS credit) is available as FITO on the ATO return. Ensure you file India ITR and receive the TDS refund if applicable before calculating FITO.
Does Australia's main residence CGT exemption apply to my India home?
Australia's main residence CGT exemption is available for dwellings that were your main residence — it can apply to overseas property if it was genuinely your main home. Non-residents cannot claim the exemption on sale. As an Australian resident who previously lived in the India property, partial exemption may apply for the years of genuine residence.