Hello Gurus,
I am an US citizen and resident of California. I sold a piece of land in India in July 2024. The Indian tax authorities deducted a hefty tax at source (a.k.a TDS, Tax Deducted at Source), from my sale proceeds @~24%. This is kinda a witholding tax to be adjusted against my Indian Tax Return (a.k.a ITR) next year. BTW...India's fiscal year runs from April to Mar, so I will file my ITR after April 2025 and expect to get a refund out of my TDS.
Now, here are my questions :
1. Do I need to report this sale and include the capital gains in my Federal tax return of tax year 2024 even though US and India has a Double Tax Avoidance Agreement (DTAA)?
2. If the answer is YES, do I or how do I report the capital gains made in Indian Rupees (INR) and more importantly how do I claim the capital gains taxes paid, because so far, I have only paid the TDS and not the actual LTCG in India. Note : Because of the DTAA b/w US and India, I do not neccessarily want to claim Foreign Tax credit, if I do not have to show the sale of property and the capital gains in my Federal return.
3. This is the most intriguing question. Do I have to report this sale of land in my California tax return? I have heard that even though US and India has a DTAA treaty, California doesn't respect that. If that is true, how do I report this sale of property and do I get any deduction/credit for the deemed taxes (i.e. not yet paid) for LTCG?
Thanks in advance to the respondents.
