Texas Tax Attorney Assisting NRIs With Dual Taxation, Property Sale & Compliance

For Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) living in the United States especially high-net-worth individuals (HNIs) navigating the complex intersection of Indian and U.S. tax laws can be overwhelming. From dual taxation issues and property sale taxation to stringent compliance under FATCA and FBAR, the challenges are numerous. This is where the expertise of a Texas tax attorney becomes essential.

Why NRIs Need a Texas Tax Attorney

The United States taxes its residents and citizens on their worldwide income. So, if you’re an NRI or OCI residing in the U.S., your Indian income such as rent, interest, dividends, or capital gains may be subject to tax in both countries. Without expert help, this can lead to unnecessary tax burdens or compliance issues. A Texas tax lawyer who understands international and cross-border taxation can guide you strategically through these challenges.

1. Understanding Dual Taxation & DTAA Benefits

One of the most critical issues for NRIs and OCIs is dual taxation. Fortunately, India and the United States have signed a Double Taxation Avoidance Agreement (DTAA) that provides relief mechanisms, including:

Foreign Tax Credit (FTC): You can claim a credit for taxes paid in India when filing your U.S. return (using Form 1116).
Exemptions or Reduced Tax Rates: Some categories of income, such as capital gains, may be taxed preferentially.

Example: Capital gains from Indian property are usually taxed in India. However, you must still report them in the U.S. via Form 1040 and use Form 1116 to avoid double taxation.
Rental income from Indian property is taxable in India, but you may get tax credit relief in the U.S.
A knowledgeable Texas tax attorney will ensure you’re maximising these DTAA benefits while staying fully compliant.

2. Selling Property in India: NRI Tax Implications

Capital Gains Tax

Short-Term Capital Gain (STCG): Property held for 24 months or less. Taxed at slab rate.
Long-Term Capital Gain (LTCG): Property held for more than 24 months. Taxed at 20% with indexation benefits.

TDS on Property Sale (Section 195)

Buyers must deduct TDS before remitting the sale proceeds to the NRI seller.
Effective TDS for LTCG can be around 20.8% or higher (including surcharge and cess).

Apply for Lower Deduction Certificate (LDC)

If your actual tax liability is lower than the standard TDS, you can apply for an LDC using Form 13 to reduce the upfront deduction.

U.S. Reporting Obligations

Capital gains must be reported in your U.S. tax return. You can claim foreign tax credits to avoid being taxed twice. Maintain sale agreements, TDS certificates, and tax payment receipts for audit-proof documentation.

3. Critical Compliance: FATCA, FBAR & Beyond

FBAR (FinCEN Form 114)

Required if your aggregate foreign bank balances exceed $10,000 at any point during the year.

FATCA (Form 8938)

Required if your foreign assets exceed $50,000 (single) or $100,000 (joint). Includes Indian mutual funds, bank accounts, insurance policies, and shares.
Non-compliance with these reporting requirements can attract steep penalties. A Texas tax attorney ensures all forms are filed accurately and on time, protecting you from financial and legal risks.

4. Recent Tax Changes Impacting NRIs (FY 2024–25 / AY 2025–26)

Asset Reporting Threshold Increased: NRIs filing ITR-2 must now report Indian assets and liabilities only if income exceeds INR 1 crore.
Capital Gain Segregation: ITR forms now require separate disclosure for gains before and after July 23, 2024.
Enhanced ITR Disclosures: More details needed for deductions under sections like 80C (e.g., policy numbers) and NPS (e.g., PRAN).
Extended Deadline: ITR filing deadline extended to September 15, 2025, for non-audit NRIs.
These changes highlight the importance of timely and customised legal-tax advice.

Strategic Outlook: Wealth Preservation & Cross-Border Planning

For HNIs, taxation is not just about filing returns it’s about preserving and optimising wealth across borders. This includes:

Strategic use of DTAA benefits
Proactive capital gains tax planning
Cross-border estate and inheritance planning
Regulatory compliance in both jurisdictions
Working with a Texas tax attorney who also understands Indian taxation for NRIs ensures you’re covered on both fronts.

FAQs for NRIs and OCIs (Quora-style)

1. Do I need to report Indian income to the IRS if I already paid tax in India?

Yes. The U.S. taxes worldwide income. However, under the DTAA, you can claim a foreign tax credit (Form 1116) to avoid double taxation. Accurate documentation is critical.

2. I’m selling inherited property in India. What taxes apply?

Capital gains apply, typically as LTCG at 20% with indexation (or 12.5% without indexation post-July 23, 2024). The buyer must deduct TDS using Form 27Q. Apply for a Lower Deduction Certificate if your actual liability is less.

3. What is the Substantial Presence Test (SPT) and how does it affect OCIs?

SPT determines your U.S. tax residency. If you’re physically in the U.S. for 183 days (weighted across 3 years), you’re a U.S. tax resident, regardless of OCI status, and subject to global taxation.

4. What are the U.S. reporting requirements for my Indian accounts?

FBAR (Form 114): Required if total foreign accounts exceed $10,000.
FATCA (Form 8938): Required if specified foreign financial assets exceed $50,000 (single) or $100,000 (joint). Both must be filed in addition to your tax return.

5. How can I reduce TDS while selling property in India?

Apply for a Lower Deduction Certificate (LDC) using Form 13 with the Indian Income Tax Department. This allows the buyer to deduct a lower TDS rate based on your actual liability.

Conclusion

Managing taxes as an NRI or OCI with assets in India and residency in the U.S. is complex. From dual taxation and TDS on property sales to FBAR and FATCA reporting, the landscape is ever-changing. With expert guidance from a Texas tax attorney well-versed in cross-border matters, you can protect your wealth, avoid penalties, and stay fully compliant.

About LawCrust

LawCrust Legal Consulting, a subsidiary of LawCrust Global Consulting Ltd., is a trusted legal partner for NRIs and Indians across the globe. Backed by a team of over 70 expert lawyers and more than 25 empanelled law firms, we offer a wide range of legal services both in India and internationally. Our expertise spans across legal finance, litigation management, matrimonial disputes, property matters, estate planning, heirship certificates, RERA, and builder-related legal issues.

In addition to personal legal matters, LawCrust also provides expert support in complex corporate areas such as foreign direct investment (FDI), foreign institutional investment (FII), mergers & acquisitions, and fundraising. We also assist clients with OCI and immigration matters, startup solutions, and hybrid consulting solutions. Consistently ranked among the top legal consulting firms in India, LawCrust proudly delivers customised legal solutions across the UK, USA, Canada, Europe, Australia, APAC, and EMEA, offering culturally informed and cross-border expertise to meet the unique needs of the global Indian community.

Texas Tax Attorney for NRIs: Expert Help with Dual Taxation, Indian Property Sales & U.S. Compliance