Australian Taxes on Indian Property: What NRIs in Australia Owe Both Countries

Australia sits in an interesting middle position among the corridors we cover. It is not the United Arab Emirates, where no personal income tax means the Indian bill is final. It is not the United Kingdom, where a top-up to HMRC is effectively guaranteed. Where you land depends on your own marginal rate, which means Australian NRIs have to actually run the numbers rather than follow a rule.

The starting point is straightforward. The ATO’s position on capital gains on overseas assets is that if you are an Australian resident, your capital gains on overseas assets are treated in the same way as capital gains on Australian property. Your flat in Kochi is not a special case.

The CGT discount does most of the work

Australia has no separate capital gains tax. A gain is added to your assessable income and taxed at your marginal rate, but for an asset held longer than 12 months an individual generally gets the CGT discount, which halves the amount brought to tax.

That single feature is why Australia behaves so differently from Britain. Halving the taxable gain means the effective rate on the whole gain is roughly half your marginal rate. Sitting in a lower bracket, that can land at or below India’s effective long-term rate of about 13% to 15%, in which case the Indian tax you already paid may cover the whole Australian liability. On a high marginal rate it will not, and you pay the difference here.

Note the holding period mismatch too. Australia’s discount turns on 12 months; India’s long-term threshold for immovable property is 24 months. A property sold at 18 months is therefore eligible for the Australian discount while still being a short-term gain in India, taxed at slab rates up to 30%. India is emphatically the expensive side of that trade, which is why our capital gains guide pushes so hard on waiting out the two years.

Positions as at August 2026. Australian outcomes depend on your marginal rate; confirm your own bracket before relying on this.

The foreign income tax offset

Australia’s relief mechanism is the foreign income tax offset. The ATO’s guidance is that if you make a capital gain taxable in Australia and you have paid foreign tax on it, you may be entitled to an offset for that foreign tax.

Two things to hold on to. First, like every credit system in this series, the offset is capped by reference to the Australian tax on that income. If India taxed you more heavily than Australia does, the excess does not come back to you as a refund. Second, and this is the recurring theme across all five of our corridor guides, the offset is for tax you have actually paid.

Australia and India have had a double taxation agreement since 1991, amended by a protocol that came into force in 2013, both listed in the Treasury’s income tax treaties register. The treaty is the framework; the offset is the machinery you actually use on your return.

Section 54 is a calculation here, not a rule

The trap we set out in the American guide applies in a softened form.

Section 54 removes your Indian capital gains tax if you reinvest the gain in another Indian residential property. Remove the Indian tax and you remove the foreign income tax offset, leaving the Australian tax on your discounted gain with nothing to set against it.

Whether that leaves you ahead depends on the same comparison as everything else on this page: half your marginal rate against India’s effective rate. For a lower-bracket taxpayer, Section 54 may genuinely save money. Near the top bracket, you are giving up an offset you would have fully used. Unlike the British case, where the answer is reliably “do not”, Australia requires the arithmetic. Run it with the capital gains calculator and an accountant.

The trap if you are planning to move back

This is the Australia-specific point most worth knowing, and it catches people who have always intended to return to India eventually.

The full 50% CGT discount is generally not available to foreign and temporary residents for assets acquired after 8 May 2012, although an apportioned discount may be available covering the period during which you were an Australian resident.

For an NRI, the sequence matters enormously. Sell the Indian property while you are an Australian resident and the discount applies in the ordinary way. Move back to India permanently first and then sell, and you may be a foreign resident for Australian purposes, with the discount restricted or apportioned on a property acquired after that 2012 date.

Neither order is automatically better, because moving home also changes your Indian residential status and therefore how India taxes you. What is certain is that the decision is far cheaper to make before you move than after. If a permanent return is on your horizon and you own Indian property, this deserves proper advice with both calendars in front of you.

Rent, reporting and the calendars

Indian rental income is assessable in Australia, converted to Australian dollars, with deductions determined under Australian rules rather than the ones an Indian return allows. Indian tax paid on that rent feeds the same offset. Our rental yield calculator sizes the Indian side; the Australian computation is separate.

Then there is the calendar problem, which is worse here than in any other corridor we cover. Australia runs 1 July to 30 June. India runs 1 April to 31 March. The two years are offset by a full quarter, so a single sale routinely falls into Australian and Indian tax years that close months apart. That affects when the Indian tax is paid, and therefore when the offset can be claimed. Raise it with your accountant before you complete rather than at lodgement.

Unlike the United Kingdom, where inheritance tax reaches Indian property at 40% once you have been resident long enough, Australia does not levy an equivalent estate duty. If you have moved between those two countries, do not carry the British assumption with you in either direction.

A workable sequence

1. Establish your marginal rate first. Everything on this page turns on it.
2. Check the holding period against both clocks, 12 months for the Australian discount and 24 for India’s long-term treatment.
3. Decide Section 54 by calculation, not by reflex.
4. Apply for a lower deduction certificate so Indian TDS reflects your real liability, see our TDS guide.
5. If a permanent return to India is likely, model the sale on both sides of the move before you book flights.
6. Keep exchange rate evidence for purchase and sale; the ATO computes in Australian dollars.

Once both positions are settled, the money still has to move, which is covered in repatriating property sale proceeds.

This guide explains how the Australian and Indian systems interact, using ATO and Treasury sources current at August 2026. It is not tax advice. Your marginal rate, the Medicare levy, your residency status and the timing of any return to India all change the result, so confirm your position with a chartered accountant in India and an Australian accountant experienced with foreign property before you act.