Tax on PropertyUnlike resident Indian, properties purchased from a non-resident Indian will be subject to TDS at prescribed rate. As per section 195 of Income Tax Act,“any person responsible for paying to a Non-Resident, not being a company or to a foreign company, of any interest or  any other sum chargeable under the provisions of this Act (not being income chargeable under the head salaries) shall at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force. Statement looks confusing! let me explain it in detail.

Understadning will be more clear if we dissect  the above statement. If you look at the very first phrase which talks about if one is paying any “sum” to a Non-Resident, where such sum is chargeable under the Act, one is required to deduct tax. Hence it says the buyer is liable to deduct tax from the payment made to the seller. Now come to the second part of the statement i.e. at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force. This clearly indicates that whether seller has any gains (whether long term capital gains or short term capital gains) or no gains, the buyer has to to deduct tax on that sum.

To clarify further; whether TDS under section 195 buyer has to be deducted on whole of the sale consideration or only on the amount of capital gains in case of purchase of immovable property situated in India from an NRI seller. Answer is; resident buying property from an NRI needs to deduct TDS from the whole sale consideration (not on gains) before making payment to the said NRI.

At what rate such TDS has to be deducted?

Selling of immovable property by a Non Resident Indian is taxable under the income tax under Chapter XII-A of the Income Tax Act, more specifically under section 115E of the Income Tax Act 1961. The rate of tax prescribed and in force is 20%. Further NRI needs to file his/her return of income in India to claim the refund of excess amount deducted if any.

How the buyer should deduct TDS?

Here the buyer of the property from an NRI should have a Permanent Account Number (PAN) before he/she enters into any such transactions. Also he/she have a Tax deduction Account Number (TAN) as per section 203A of the Income Tax Act 1961. Along with the same the buyer should collect the Permanent Account Number (PAN) of the said Non Resident Indian before deducting the tax. The buyer should deposit, (by using challan for payment of TDS), the income tax so deducted, with the government (through banks authorized to collect direct taxes) within seven days from the end of the month in which such tax is deducted.

Once the TDS has been paid, the buyer should file the TDS returns electronically, within the due dates as applicable (to be submitted in the Form No. 27Q) giving the details of the Non Resident Indian, his/her address, PAN along with self PAN and TAN details. After filing the TDS returns electronically, the buyer shall issue the TDS certificate in Form 16A to the said Non resident Indian, within 15 days from the due date of furnishing TDS returns. Remember, if the buyer fails to deduct or fails to pay the amount deducted he/she will be treated as Assessee in Default as per section 201 of the Income Tax Act, 1961 and will be liable for payment of interest, penalties and prosecution.

Is there a way out to avoid the TDS?

There are certain instances when the NRI can get a waiver of the TDS such as; if the NRI is planning to re-invest the capital gains of the property in another property or in tax exempt bonds. In such cases, the NRI will be exempt from tax in India and would not like to have TDS deducted.

Even there is no capital gain at all in the transaction or the tax payable on capital gain is less that the TDS deducted, then the payer (buyer) can approach the assessing officer and get a certificate of lower or nil deduction of TDS. This is provided in subsection (2) of Section 195.  Alternatively, u/s 195(3), payee (the NRI seller) also can approach the AO and get the certificate.

You might want to read: The must knows for NRIs while Buying/Selling properties in India

In such cases, the NRI can apply to the income tax authorities for a tax exemption certificate under section 195 of the Income Tax Act through an application in the same jurisdiction that his PAN belongs to. There he/she will have to show proof of reinvestment of capital gains. If he/she is planning to buy another house, then the allotment letter or payment receipt has to be produced. Even if he/she is planning to invest in capital gains bonds u/c 54EC, he/she would need to submit an affidavit stating that he/she would invest the capital gain amount in to bonds. Usually, the buyer holds back the last installment of payment until this certificate of exemption is furnished to him/her by the seller.

Please note that as per the Finance Act, 2013, TDS at the rate of 1% is applicable on sale consideration above Rs 50 lacs on transfer of immovable property (applicable to resident transferor/seller).

What happens if such TDS has not been deducted or not paid on time:

If the tax is not deducted, the assessee in default is liable to pay interest @ 1% p.m from the month in which the tax is sought to be deducted till the month in which such tax is deducted. Even if the tax deducted, but not paid within the due dates, the assessee in default is liable to pay interest @ 1.50% p.m from the month in which the tax is deducted till the month in which such tax deducted is paid.

In another scenario where the tax deducted at source and the interest, penalty etc are not paid the same can be recovered by the Government from the purchaser by attaching the moveable, immoveable property, attaching the salary & other receivables etc under Section. 222 and 226 of the Income tax Act 1961.

Prosecution:
Failure to pay the tax deducted to the government as per the law can attract punishment of rigorous imprisonment of not less than three months but which may extend upto seven years and also a fine which may be decided by the Court as per section 276B of the Income Tax Act 1961.

How to deal with TDS while buying immovable properties from NRIs?

155 thoughts on “How to deal with TDS while buying immovable properties from NRIs?

  • October 1, 2013 at 9:14 AM
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    Hi Soubhagya,
    Me and my husband holds a joint property in India purchased in year 2007 and we are POI who holds citizenship of other country. Currently I hold a resident status being in India for last 2 years but my husband is overseas only and visits us only once in 6 months for period of 15 days. Now we have decided to sell our property in India and I understand we fall under category of long term capital gain. My question is do my husband has to pay 20% TDS even if we decide to invest our gain into government bonds?? How does the calculation will work in our case?? Can A.O. issue him No TDS certificate?? Which form we should use for Income-Tax??? Pl. guide.

    Reply
    • October 1, 2013 at 10:05 AM
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      Hi Hemangi,

      It’s very simple. You need to calculate 20% of the total consideration value and this needs to be deducted by the buyer. You can read this article to know more about the process and required form to be used for such TDS payment.

      Reply
  • November 9, 2013 at 2:08 PM
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    hi sir,

    if buyer is Nri and does not have PAN card and purchased property in india after June’2013 than 1% TDS is applicable and how to pay because there is no PAN

    Reply
    • November 9, 2013 at 5:35 PM
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      Hi Gayathri,

      As per Rule 114C, it is not mandatory for an NRI/PIO to have a PAN for entering into a property transaction. But the recent introduction of provision u/s 194IA says, for deduction tax both buyer’s and seller’s PAN needs to be mentioned in the form 26QB. In such case I suggest, you should get a PAN first to execute smooth process of the transaction.

      Also remember! PAN is very much required to repatriate the sale proceeds (if wish to sale further) of the property out side India.

      Reply
      • November 15, 2013 at 3:29 PM
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        our is constructions company, is it necessary to collect from 16B from buyer, because all transaction are reflecting in Form26AS

        Reply
        • November 15, 2013 at 4:26 PM
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          Hi Gayathri,

          Anyways you can file IT returns by referring 26AS, but what if there is any sudden requirement from dept to furnish for 16B.

          Also there may be a possibility that the buyer deducts TDS amount (most chances for final payment), but does not pay and you will only have to wait when it reflects in your form 26AS.

          Reply
  • December 3, 2013 at 9:46 AM
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    Thanks for this article…
    I am in the process of buying an apartment. The owner is a NRI. Property value is under 50L
    He has a PAN and will be paying taxes on the capital gains. My questions:
    1. Should I deduct tax at source and then make a payment to him(I have a PAN+TAN)
    2. If he wants to pay taxes on his own and does not want tax deduction at source, What documents should I get from him in this case
    3. Is the buyer liable for tax deduction at source…?

    Thanks,
    Amit

    Reply
    • December 4, 2013 at 4:26 PM
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      Hi Amit,

      Find the answers in sequence to your queries.

      1. Since the seller is a non-resident, you are supposed to deduct tax before making any payments. It’s good that you have both PAN & TAN. These are very much required here.

      2. No tax or lower tax deduction certificate from the Assessing Officer where seller’s PAN Jurisdiction belongs to.

      3. Buyer is not liable, but responsible to deduct tax at source.

      Reply
  • December 24, 2013 at 5:24 PM
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    Hi Soubhagya, I am planning to buy a resale property in Mumbai from a NRI with PAN card. Property is 27 years old. Transaction value is above 50 Lacs.
    Below are the queries, requesting you to answer and oblige.
    1. NRI seller is not ready for any TDS, since his CA has recommended non applicability as he is PAN card holder. I need to show him some official publication will help me to prove it. Please guide me through it.
    2. If TDS is applicable, what percentage should be applicable. 22.6% or 1%
    3. When TDS should be deducted and how to ensure that seller is will not change his mind post TDS is paid by me?
    4. Is TDS mandatory to be deducted? what are the implication buyer if he fails to do so?
    5. How TDS will be calculated, Since property is old, do I have to consider CII value and consider it for deduction and deduct it at actual value?

    I am about to finalize the deal and seller is pressurizing me to respond on it. Your immediate response will be highly appreciated.

    Reply
    • December 24, 2013 at 7:28 PM
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      Hi Jindal,

      Please find the answers in sequence to your queries;

      1. It seems your client’s CA needs some more understanding about the provision of the act u/s 195 applicable to non-resident. Visit the link here http://law.incometaxindia.gov.in/Directtaxlaws/act2005/section195.htm

      2. It should be at 20.60% on total sale value (please note it’s not on capital gain amount)

      3. TDS should be deducted before making any payments. But sorry I can’t suggest anything if seller changes his mind later. In such risky cases better avoid dealing with him.

      4. Yes it is mandatory! There is of course negative impact on buyer if he/she doesn’t deduct TDS. Failure to deduct whole or any part of the tax as required to be deducted, a penalty equal to the tax sought to be deducted and not so deducted can be levied under section 271 C of the Income Tax Act 1961. Failure to file the quarterly TDS returns a penalty of Rs.100/- per day for every day during which the failure continues can be levied under section 272A(2). Failure to issue the Certificate of Deduction of Tax at Source, a penalty of Rs.100/- per day for every day during which the failure continues can be levied under section 272A(2). If the assessing officer is satisfied that the purchaser had not paid the tax deducted at source without any reasonable cause, a penalty to the maximum of the amount equal to the tax deducted at source can be levied under section 221 of the Income Tax Act 1961.

      5. As indicated in point number 2. TDS will be levied on total sale consideration. Thus do not worry about CII or calculation of LTCG etc.

      Reply
      • December 25, 2013 at 11:09 AM
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        Thanks for your timely response. You are the savior….

        Reply
        • December 25, 2013 at 12:33 PM
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          You are most welcome Jinald!

          Reply
  • December 25, 2013 at 11:07 AM
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    Dear Soubhagya,
    Thanks for this very informative page. This has really helped me, but still I have certain questions and requesting your kind response.
    scenario: Negotiating with an NRI on TDS for a resale property in Mumbai which is 27+ yrs old and value above 50 lacs. I am also currently residing out of India for more than 1 yr and having NRI status.
    Questions:
    1. As the seller and buyer is NRI, what percentage shall be considered for TDS?
    2. Is deduction of TDS mandatory? If TDS is not deducted what implication buyer can have in future or during registration?
    3. When TDS should be deducted during the property deal? Is it after the cheque payment less TDS and contract signature or before? best practice?
    4. Can I use same e-payment system for 20% TDS as well i.e. http://www.tin.nsdl.com

    Thanks in advance….
    Jinal

    Reply
    • December 25, 2013 at 12:28 PM
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      Hi Jinal,

      Hope I have answered most of your queries in the previous response.

      1. Does not matter buyer’s status, if seller is NRI then it’s 20.60%
      2. See my previous response. Click here http://ow.ly/s3lVu
      3. Before making any payment to the seller
      4. You have to submit it through Form No. 27Q.

      Reply
      • December 25, 2013 at 3:34 PM
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        Thanks alot!!!
        Please share your contact details on my email id, as I am interested in your companies services.

        Reply
        • December 25, 2013 at 4:00 PM
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          Sure!

          Reply
      • December 31, 2013 at 12:11 AM
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        Hi Soubhgya – how do i feel Form 27Q ? not filled online right ? fill it physically and submit @ bank ?

        Also i have applied for TAN and is expected anytime .. do i need a TAN copy or just a TAN number will suffice

        thanx

        Reply
        • December 31, 2013 at 9:33 PM
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          Hi TS,

          To file TDS returns under 27Q quarterly statement of deduction of tax from any sum payable to non-residents can be done either online or offline. You just need to have TAN number for this.

          With regards to file quarterly TDS returns, you can approach any chartered accountant or write to us at info@succinctfintech.com

          Reply
  • January 6, 2014 at 9:04 PM
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    Dear Soubhagya,

    If the NRI seller has a capital gains account, can the TDS of 20.60% on the sale value be paid to that account & the rest directly to him by the purchaser?

    Thanks in advance.

    Reply
    • January 6, 2014 at 9:55 PM
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      Hi Ray,

      TDS amount has to be paid directly to IT Dept.

      Reply
  • January 14, 2014 at 9:36 AM
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    We are willing to buy a residential property from an NRI (cost more than Rs. 50 lacs). NRI does not have PAN, I have PAN but no TAN. NRI is ready for applicable TDS. Transaction needs to be closed in a week. We want to buy the property. From the above article, it appears TAN+PAN of mine and PAN of NRI is must. Is there any alternative way to complete the transaction. Please respond. Thanks in advance.

    Reply
    • January 14, 2014 at 10:53 AM
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      Hi Veen,

      As per current provision these are very much required things to execute such transactions. I don’t find any other route within the purview of IT law.

      Reply
      • January 14, 2014 at 12:43 PM
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        Thanks for the reply. Any provision to get a permission/letter from the assessment officer so that the transaction can be completed and then TDS is remitted (after obtaining TAN/PAN numbers).
        Kindly reply.

        Reply
        • January 14, 2014 at 1:29 PM
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          Hi Veen,

          In this case, you need to meet the assessing officer within the jurisdiction where your PAN belongs to.

          Reply
  • January 27, 2014 at 5:09 AM
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    1. Is TDS form NRI ( on 73 lacks) 20%+3%cess+10%Surcharge or only 20%+3%cess?
    2. Person has already 1 house. Can he invest in another residential property to save tax on capital gains?

    Reply
    • January 27, 2014 at 9:00 AM
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      Hi Veen,

      It should be 20.60% and yes sale proceeds can be invested in another residential property (within the given time frame) to save CG tax even if there is already one property exists.

      Reply
  • January 29, 2014 at 11:10 PM
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    sir
    Joint NRI owners are selling a property in india . they do not have a PAN and are
    ready to invest in 54EC bonds . Is it necessary for them to obtain PAN or can they
    obtain 54EC bonds and produce the same to purchaser and avoid TDS deduction.

    Reply
    • January 29, 2014 at 11:51 PM
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      Hi Ramgopal,

      In such case PAN becomes a must for them.

      Reply
  • February 3, 2014 at 5:03 AM
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    Hi Soubhagya,

    I am a NRI seller selling a 50+ lakh property to joint resident Indians. From your extremely helpful article I understand form 27Q needs to be filed electronically after paying TDS through challan. Is the payment to be done by paper challan at an authorised bank or can it be paid through an online challan. As per your response on Facebook comments, since form 26QB does not apply to NRIs can online challan no./ITNS 281 on TIN’s website – https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp, be used to pay the TDS followed by filing the return in 27Q? Online payment is obviously preferable to avoid typographic mistakes that sometimes happen when operators manually enter data at I-T dept. after paying at bank. Also, bank payment probably takes time to reach I-T dept. delaying issuing form 16A.

    Also, there are 2 joint sellers (both NRIs) and 2 joint buyers (both resident Indians). Do we have to pay TDS through 4 challans (25% equal allocation from every buyer-seller combination)? The form 26QB FAQs give an example of a similar situation saying 4 forms should be submitted by proper proportion. I understand form 26QB does not apply to us but wanted to be sure whether we need to submit 4 challans. Your explanation would be much appreciated.

    Thanks,
    Braja

    Reply
    • February 4, 2014 at 3:43 PM
      Permalink

      Hi Braja,

      You can do either online of offline payment of TDS. Since there are 2 owners, you need to file challan separately for each owner basis there ratio of holding.

      Reply
  • February 18, 2014 at 12:10 PM
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    Dear Soubhagya
    For purchase of property from an NRI and total consideration being greater than 1 crore with the TDS rate be 20.6% or 22.6% (surcharge applicable)?
    Regards
    Ram

    Reply
    • February 18, 2014 at 8:51 PM
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      Hi Ram,

      As I understand, there is no surcharge applicable here.

      Reply
  • February 25, 2014 at 3:06 PM
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    I am buying prop from NRI for Rs114lacs. He has already received NIL deduction certificate from AO as he has already bought one property in india just last month. in such condition do i have to deducet 1% TDS as per recent changes in IT act or NIL TDS as per AO certificate

    Reply
    • February 25, 2014 at 6:57 PM
      Permalink

      Hi Manish,

      In such case you don’t need to deduct TDS. Fyi, 1% TDS u/s 194IA is applicable to resident individual sellers only.

      Reply
  • March 4, 2014 at 11:10 PM
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    Sir..could you tell me that if notice is recieved under section 201 and both the parties are n r i. Than what is the way out?

    Reply
    • March 4, 2014 at 11:42 PM
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      Hi Ankit,

      I feel payment of interest will be the way out.

      Reply
  • March 12, 2014 at 7:39 PM
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    If the seller and buyers are resident Indians and the property value is above Rs. 50 Lakhs, then 1% TDS is mandatory. Should we add 3% on 1% TDS as cess or Just 1% of total consideration?

    Reply
    • March 12, 2014 at 8:40 PM
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      Hi Veen,

      It’s only 1% of total consideration.

      Reply
  • March 16, 2014 at 11:14 PM
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    Hi Soubhagya,
    Thank you for the detailed article. I have one doubt, i am about to finalize a property deal with the NRI at 55 L. But he is insisting that the registration should be done at 49L. By doing this he would be
    1) avoiding 1% TDS that i will have to deduct
    2) portraying this as non NRI transaction.

    My question is:
    1) If i go ahead and do the transaction at 49L, what are my liabilities?
    2) At the time of registration i dont have a single document to prove that the Seller is NRI. In that case how would section 195 apply?

    Reply
    • March 17, 2014 at 8:35 PM
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      Hi Ashish,

      If the registration value is 49Lacs, then the seller may get an escape from TDS, but it’s upto him how he justifies rest 6lacs of payment received from you. Btw how will you justify additional 6Lacs of payment?

      I suggest you, take the help of an expert to deal with, if there is a confusion about residential status. If you go ahead with the transaction as seller is RI, but later it comes as an NRI case, then you will be in trouble for non payment/ short payment of TDS.

      Reply
      • March 18, 2014 at 6:44 PM
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        Thank you Sir. Seller is going to deposit his money in his NRO account and obviously questions would be asked. In that case i will be the one at losing end and i will have to pay the TDS of 20%. 🙁

        Reply
        • March 18, 2014 at 7:32 PM
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          Hi Ashish,

          Since seller is taking all the credits in NRO account, then of course it becomes an NRI case. So play safe here 🙂

          Reply
  • March 20, 2014 at 9:21 PM
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    Hi Soubaghyaji,
    We would be thankful to you for guiding us in the following transaction:
    The Buyer is Resident Indian, Senior citizen and the Seller is a lady from Australia with Australian Pass port. She has two or three immovable properties in India and has been filing IT Returns for her earnings from rental income. She wants to sell one of her property to the senior citizen as mentioned above.
    Can she obtain an exemption certificate from IT Dept for non deduction of TDS, if she is going to invest in CG Bonds? How much time it will take to get an exemption certificate from IT Dept. What are the procedures to get such an exemption certificate?

    Waiting to get your views on this please.

    Reply
    • March 20, 2014 at 11:29 PM
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      Hi Padmanabhan,

      The seller needs to meet the assessing officer within the jurisdiction from where here PAN belongs to. I guess she can assign an authorised person to do this on her behalf. If she is planning to invest in capital gains bonds, she would need to submit an affidavit stating that she would invest the capital gain amount in to bonds. But I can’t say how much time will it take.

      Reply
  • March 24, 2014 at 1:56 PM
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    I am loking to buy a property from an NRI staying in US. The Property would cost 38-39 Lacs (we are negotiating). I need following information –
    1) From the above conversation I could conclude that TDS has to be deducted by buyer if property cost is more than equal to 50 Lacs, Is that correct? I will not have nay liability to Income Tax Department as property Cost is less than 50 Lacs, right, or is there any other liability of mine towards any other government agency?
    2) NRI is giving POA to his relative. Can he execute POA from USA without his relative being in USA (or both of them being in a single geography)?
    3) What is the other precaution that I should take while buying property from NRI?

    TIA.

    Reply
    • March 24, 2014 at 10:05 PM
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      Hi Deepak,

      Find answers in sequence to your queries;

      1. No! You didn’t get it. In case of NRI, TDS is a mandate irrespective of the consideration value. Here TDS will be at 20% on Rs.38-39Lacs as per the property value.
      2. I think he can do show with Special POA, but I am not sure.
      3. TDS is the only thing you need to look at, that it has been deducted before you release any payment.

      P.S. You need to have TAN (or apply one) for the purpose of deducting TDS in NRI case.

      Reply
      • March 26, 2014 at 11:29 AM
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        Thanks Soubhagya.
        I’ll speak to current owner of the house about Tax Implications on the transaction and TDS that I would be deducting.

        Reply
        • March 26, 2014 at 4:10 PM
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          Great!

          Reply
  • April 8, 2014 at 1:32 PM
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    Hi, I am indian nation purchasing property value of 60 Lac from NRI, he don’ t have a TAN No. if the TAX will be applicable 20% where i can pay the payment

    Reply
    • April 9, 2014 at 7:44 AM
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      Hi Stanly,

      As a buyer of the property from NRI, you need to have TAN. Not the NRI!

      Reply
  • April 10, 2014 at 5:01 PM
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    Hi Soubhagya,

    Very informative article.

    Please clarify on property purchase (for long term capital gain) from an NRI, can sec 115 E be applicable to deduct only 10.6% TDS instead of 20.6 %? If not why?

    Thanks in advance.

    Regards,

    Avik Ghosh – Bangalore

    Reply
    • April 10, 2014 at 6:36 PM
      Permalink

      Hi Avik,

      It’s not applicable to property purchase/sell.

      It is only applicable in case gains (LTCG) arised from specified assets which acquired out of convertible foreign exchange; For your ref, specified assets are, Share, Debenture, Securities/Deposits in an Indian Company. Such Indian company should not be a private entity.

      Reply
  • April 11, 2014 at 6:31 AM
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    Hi Soubhagya,

    Thank you so much for a prompt response and clarification.

    Regards,

    Avik

    Reply
    • April 11, 2014 at 8:11 AM
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      You are most welcome Avik.

      Reply
  • April 13, 2014 at 7:06 AM
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    Hi Soubhagya,

    A deal is going to happen on 15.04.2014. Current status of sellers is Husband is resident Indian and wife is an NRI. All payments are taken in India in savings bank account.

    Will the TDS be 1 % for payments to husband and 20.6 % for payments to the wife?

    Please advice.

    Thnak you.

    Avik

    Reply
    • April 13, 2014 at 12:27 PM
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      Hi Avik,

      This I call a complex case study for which you may not find an exact (or one) answer in any books or web. But as per my earlier experience with regards to similar case, it would be safe going as per your understanding i.e. TDS be 1 % for payments to husband and 20.6 % for payments to the wife.

      Reply
  • April 14, 2014 at 9:52 AM
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    Thank you Soubhagya.

    Reply
    • April 14, 2014 at 9:53 AM
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      You are most welcome Avik.

      Reply
  • April 17, 2014 at 12:43 PM
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    what if the buyer is NRI any special provision is applicable

    Reply
  • April 29, 2014 at 11:22 PM
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    A very informative article. My query is as follows – my wife and I are planning to buy a property of 120 lacs from a mother and a daughter. Mother has a pan number and she is an Indian resident. However her daughter is an NRI and does not has pan number. As per their property papers, there is no share of ownership which is mentioned in the document. Please suggest shall we have to deduct 20.6% TDs on 50% share of daughter and deposit TAN through two separate TAN no I.e. one of my wife and second through my TAN.

    Reply
  • April 29, 2014 at 11:26 PM
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    In my last query I want to add that all payments shall be received by the mother as she has a valid power of attorney for execution of agreement .

    Reply
    • April 30, 2014 at 9:59 AM
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      Hi Shrivastava,

      Since the property is owned jointly between NRI daughter & Resident mother, I believe you need to go by deducting 20% tds on NRI’s share (file separately between you and your wife with your respective TAN) and 1% tds on Resident’s share (file separately between you and your wife). Though there is no clarity about the ownership share, you may take it as 50-50 each.

      I think it doesn’t matter to whom (mother or daughter) the payments are done as long as they are declaring their separate receipts while filing their IT returns.

      Reply
      • April 30, 2014 at 9:31 PM
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        In case of an NRI, if the daughter does not have a PAN card, shall I still require to deduct TDS at 20.6%. Whether I will be able to issue TDS certifcate and file a valid TDS return

        Reply
        • April 30, 2014 at 11:08 PM
          Permalink

          Hi Shrivastava ,

          As per Rule 114C of the act it is not mandatory for an NRI / PIO to have a PAN for entering into a property transaction. You can issue TDS certificate after successfully filing of TDS returns. But I feel PAN may be required if NRI wants to have TDS certificate.

          Reply
  • May 3, 2014 at 9:36 PM
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    Hi,

    First of all, thanks for the great site and prompt responses. Very helpful!!

    Went thru all the comments, still have few questions for my situation (similar to complex case study above):

    We (husband and wife) are both Resident Indians and are planning to buy a flat valued
    at 80 lacks. The sellers, the wife is a Resident Indian and the husband is NRI. Both have
    PAN cards and joint, regular saving account (i.e resident account). The sellers are
    planning to invest the sale proceeds in another flat in India, to avoid the LTCG.
    Both of us have PAN cards, but no TAN numbers.
    Can you please confirm how much amount, how many deductions under what section and
    rate should we deducts TDS?
    From my thinking, TDS should be:
    by buyer husband
    from seller husband: 20.6% of 20 lacks, form 27Q
    from seller wife: 1% of 20 lacks, form 26QB
    by buyer wife
    from seller husband: 20.6% of 20 lacks, form 27Q
    from seller wife: 1% of 20 lacks, form 26QB

    Another question: Why is TAN mandatory for purchase from NRI but not from resident?

    Once again, keep up the excellent work.

    Thanks in advance.
    Adarsh.

    Reply
    • May 4, 2014 at 12:09 AM
      Permalink

      Hi Adarsh,

      At very first I would like to mention, NRI can not have resident account either singly or jointly. You as a buyer ensure any payment towards NRI needs to be done in NRO account only.

      Basis ratio of ownership of the respective sellers, you need to divide the payments. As per my understanding, NRI share needs to be taxed at a rate of 20% which has been explained u/s 195, and resident seller’s portion has to be taxed at 1% u/s194IA. For the purpose of TDS on NRI share, you need to have TAN (which is a must). The format of payment of TDS on each payment will be same as you have mentioned.

      TAN is mandatory for deducting/depositing TDS while buying property from NRI. This is because you need to file quarterly TDS returns which is not applicable when you buy from Resident Individual. More over the rules have been set by the Big Bossess 🙂 What to do 🙂

      Reply
  • May 4, 2014 at 10:39 PM
    Permalink

    In case of a jointly held property where the share of ownership is not specifically mentioned, can a buyer deduct tds based on an affidavit from both the sellers indicating their share let say 100% and 0% respectively. will it be correct on the part of the buyer to deduct TDs in that manner under the income tax.

    Reply
    • May 5, 2014 at 9:49 AM
      Permalink

      Hi Shweta,

      Making an owner as 0% share of ownership in a jointly held asset will certainly create a dubious situation. In absence of any valid proofs which indicates what each owners own, I would suggest better go by 50-50 ratio. This may be a safer option from both buyer deducting TDS and sellers selling the property point of view.

      P.S. If it’s an NRI matter, you need to be more cautious about these.

      Reply
  • May 8, 2014 at 5:38 PM
    Permalink

    My wife and my mother purchased a property from an NRI at a consideration of exactly Rs.50 lakhs. Will they be liable to pay TDS amount of 1%. Please note the consideration is exactly 50 lakhs so wanted to clarify.

    Reply
    • May 11, 2014 at 10:52 AM
      Permalink

      Hi Govind,

      In case of NRI, TDS is 20% not 1%.

      Reply
  • May 23, 2014 at 8:56 PM
    Permalink

    Hi Soubhagya,
    I got a PAN card in Nov 2013, While I was still in the US. They issued the PAN
    but the jurisdiction is Delhi, where as I’m in Chennai. How do I change my
    jurisdiction to Chennai and how long will it take?

    Thanks
    Shanti

    Reply
    • July 13, 2014 at 2:50 PM
      Permalink

      Hi Shanti,

      You need to apply for change in PAN data.

      Reply
  • June 1, 2014 at 3:57 PM
    Permalink

    Hello Soubhagya

    I am an NRI and intend to sell one of my Residential Apartments, consideration value of about Rs. 35 lacs to Resident Indian. The property was purchased by me for Rs. 10 lacs in 2003 from my earnings in India, when i was Resident Indian and NOT NRI.

    I understand TDS@20% will be deducted by buyer on above transaction.

    I have other Residential apartments also. Can i save this TDS by investing it into yet one more Residential apartment. If yes, do i need to invest complete amount and what documentations i need to do to avail exemption on TDS.

    Reply
    • June 1, 2014 at 9:33 PM
      Permalink

      Hi Sanjay,

      Since the property you are selling is a residential house property, thus you can save taxes just by utlising the long term capital gain amount. As you are an NRI, you need to produce the details of allotment letter or payment done for the purchase of new house property to assessing officer along with an an application in the same jurisdiction where your PAN belongs to.

      Reply
  • June 3, 2014 at 6:50 AM
    Permalink

    Hello Soubhagya
    does it mean even if I have already multiple residential properties, still I can invest capital gains of sale on one apartment and buy yet one more apartment to save tax.

    Reply
    • June 3, 2014 at 8:42 AM
      Permalink

      Yes! You got it right.

      Reply
  • June 4, 2014 at 7:14 AM
    Permalink

    My Father has purchsed a residential plot in Jan-2014 for 75 laks (say property A). He is planning to sell another residential property (it was purchased 8 years ago, say property B) in July-14 which is likely to fetch a gain of 80-85 Laks.
    Could you let us know if there is any way out to save capital gain tax.

    Reply
    • June 4, 2014 at 7:59 AM
      Permalink

      Hi Veen,

      It could have been allowed if the property purchased in Jan-14 would have been a residential house property not residential plot. Other way out is, start constructing a house on the same plot and utilise the gain amount upto 3 years from the date of current sale of house property.

      Reply
      • June 4, 2014 at 8:25 AM
        Permalink

        1. Should he spend all gain from property B to build a house in property A or can he adjust for plot value+construction in property A?
        2. The construction in property A should be completed by 3yrs from Jan-2014 or July 2014.
        3. If he completes construction in 6 months in property A and sells the it immediately, will it attract capital gain on property B?

        Reply
        • June 4, 2014 at 8:23 PM
          Permalink

          Hi Veen,

          Find answers as per your queries;.
          1. Sounds logical. Means you can adjust.
          3. In such case, sell of property B will be considered as short term capital asset and any gains out of this will be taxed as per your tax slab.

          Reply
          • June 4, 2014 at 11:48 PM
            Permalink

            Sorry, I mistaken! Gains from property B will be treated as LTCG as it is 8 years old.

  • June 4, 2014 at 11:15 PM
    Permalink

    What about gain on selling property A (which will be a constructed house now)? Will it attract short-term capital-gain tax on A as well?

    Reply
    • June 4, 2014 at 11:47 PM
      Permalink

      Sorry, I mistaken! Gains from property B will be treated as LTCG as it is 8 years old and property A’s gain will be STCG.

      Reply
  • June 5, 2014 at 12:01 AM
    Permalink

    Thank you for your quick reply! Keep it up!!
    If my father sells property A (constructed house) after 3 years instead of within a year, will it still attract LTCG on gains(which is used to construct house in A) of property B ?

    Reply
  • July 7, 2014 at 12:35 AM
    Permalink

    Hi Soubhagaya,
    I am resident Indian and buying a property from Aurstalian NRI’s ( owned by husband and wife). I am a single seller.
    I have purchased the property in 62 lakhs. The agreement to sale was done on 21st May 2014. The sale consideration is also 62 lakhs. I have the TAN, PAN and both the sellers also have their PAN card. I will also be deducting 20.6% as their tax. Which is 12,77,200.
    My questions are:
    1. When I fill form 26QB, Do I enter their Indian address or their Australian address
    2. Do I enter the booking date as the date agreement to sale was done that is 21st May 2014.
    3. I understand I have to fill two 26QB forms . One for husband and one for wife. So do I cut TDS of 633860 for husband. And Same amount for wife.
    4. I am paying the tax online (SBI). How fast will the tax challan counterfoil be generated. Immediately? Ideally I would like to pay this amount few hrs before going for registration of Sale deed as the amount of the tax is very very high.
    5. If I am not paying online. What I need to do. Please elaborate ? How many days will it take for my tax challan to be generated.
    Regards,
    Sangeeta

    Reply
    • July 7, 2014 at 8:08 AM
      Permalink

      Hi Sangeeta,

      Hold on! You are doing it wrong! Since the sellers are NRI, form26QB is not applicable here.

      You need to deduct TDS and deposit the same through CHALLAN NO./ITNS 281 (https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp) -> Nature of Payment as “Other sums payable to a non-resident” u/s 195.

      Of course you have to pay TDS amount separately with the proportion you have mentioned in point# 3.

      Once TDS amount is deposited, you need to file TDS return before 15th of July. FYI, July 15, 2014 is the due date for filing TDS returns for the 1st financial quarter ending June 30, 2014.

      Reply
  • July 8, 2014 at 7:04 PM
    Permalink

    Thanks a lot ,
    But could you give me more information.
    1. Do I need to fill two challans . One for each seller ?
    2. For 62 Lakhs, Do I spilt the amount to be paid ( i. e 31 lakhs ) in two for each challan. and spilt the tax accordingly
    3. will it be ” TDS/ TCS payable by tax payer ” or TDS/TCS Regular Assesment ( Raised by IT Deptt)
    4. The ITNS 281 tax challan asks me break up income tax is 20 % which is 12,40,00, Education Cess is 2% which is 1,24000, and SHEC Cess is 1% which is 62000. adds up to 14, 28,000. BUT when we collectively take it as 20.6% the tax to be paid is 12,77,000. Please let me know the exact amount I should cut as TDS for sale consideration of 62 lakhs. Also the challan does not mention SHEC cess to be paid. which is mentioned in the income tax site under section 195. Please advise. As it is very urgent.

    Regards,
    Sangeeta

    Reply
    • July 9, 2014 at 9:18 AM
      Permalink

      Hi Sangeeta,

      1. Yes
      2. Yes
      3. Simply click on form link CHALLAN NO./ITNS 281 under TDS/TCS
      4. In the challan you won’t find this break up. While making the payment through bank there you will see the head of basic ta, cess, interest etc. Enter 20% of the amount in basic tax and 3% of 20% amount in Education Cess. Tax Rs. 62,0000, Cess Rs. 18,600. [If consideration amount is Rs. 31 Lakhs (50% share)].

      Reply
      • July 9, 2014 at 10:43 PM
        Permalink

        Thanks a lot. But a question you misunderstood was ” will it be ” TDS/ TCS payable by tax payer ” or TDS/TCS Regular Assesment ( Raised by IT Deptt)”…
        Let me reword it. In the form ITNS 281, there is an option which says
        1.TDS/ TCS payable by tax payer
        2. TDS/TCS Regular Assesment ( Raised by IT Dept)”

        which one should I Choose.

        Secondly is it ok to fill one challan and then fill the TDS accordingly.?

        Let me know

        Reply
        • July 10, 2014 at 10:22 AM
          Permalink

          And you were keep missing to add (200) & (400) for the Type of Payment 🙂

          It should be (200) TDS/TCS Payable by Taxpayer.

          You can file challan then make the payment at bank also. Then you can go ahead for filing of quarterly TDS return. Cheers!

          Reply
  • July 10, 2014 at 9:38 PM
    Permalink

    Hi Soubhagya ,

    I recently bought a property in May -2014 around 68.75 Lacs , took a LOAN already and have not paid 1% TDS till now , Couple of Questions ;

    How much Tax I need to pay now ?
    Is there any penalty fee which i would be imposed of ?

    Thanks in advance,
    Jagesh

    Reply
    • July 10, 2014 at 10:35 PM
      Permalink

      Hi Jagesh,

      So far what I am seeing, IT dept has been little lenient towards this. What I suggest you is, without any single day delay, go ahead and make required TDS payment asap.

      Reply
  • August 13, 2014 at 1:52 PM
    Permalink

    I am in midst of finalizing a deal with NRI regarding a property that he inherited from his Father. As per Section 195, I am supposed to deduct 20.6% TDS but he is insisting that this percentage is only applicable if the money is being remitted to his account outside of India and not when the amount will be paid in India. Does this hold true ?

    Reply
    • August 13, 2014 at 2:00 PM
      Permalink

      Hi Aditya,

      No! Simple thing, If the seller is NRI (doesn’t matter whether he keeps the money in India or take it out) TDS is 20.60% until he gets you any proofs of low/no TDS deduction.

      Reply
      • August 13, 2014 at 2:16 PM
        Permalink

        Thanks Soubhagya !

        Reply
        • August 13, 2014 at 4:33 PM
          Permalink

          You are most welcome Aditya!

          Reply
  • September 5, 2014 at 2:44 PM
    Permalink

    Hi Soubhagya
    The date of agreement is 5 Aug. The seller is NRI. We have currently deducted 20.6% of consideration amount and the buyer has promised to give us Lower TDS certificate within 1 month following which we will file the TDS and return the balance to him. According to my understanding the last date for TDS filing by us would be 7 October following whcih there would be penalty @1.5% per month. Two doubts: 1) Am i right on the last date of filing(7 October) 2)1.5% amount of what? ( consideration or capital gain tax).

    Thanks a lot for your help Soubhagya.

    Reply
    • September 7, 2014 at 5:52 PM
      Permalink

      Hi Vidhi,

      Yes! This is correct.

      Penalty is normally levied on tax amount.

      Reply
      • September 8, 2014 at 10:26 AM
        Permalink

        Thanks Soubhagya for the quick response.
        Wanted to clarify some more points:
        1. The address to be mentioned in challan No. 281 is that of the property being purchased?
        2. Does the buyer after filing challan no. 281, needs to compulsory file quarterly TDS return?
        Thanks

        Reply
        • September 8, 2014 at 11:07 AM
          Permalink

          3. Also, in case of online filling through challan no. 281, under various heads of income tax, cess, surcharge, I fill in only 2 heads ( income tax- 20% and education cess-0.6%). Other heads such as surcharge, interest should be completely left blank?

          Reply
          • September 8, 2014 at 11:52 AM
            Permalink

            Hi Vidhi,

            Answers in sequence to your queries.

            1. No! It is the address of the Deductor
            2. Yes
            3. Yes

  • October 1, 2014 at 6:49 PM
    Permalink

    Hi,
    I am planning to buy a property from a person who was NRI at the time he purchased the property ( 3 years back). He is now a resident Indian (since last 1 year). How would the TDS be calculated in such case?

    Reply
    • October 1, 2014 at 9:08 PM
      Permalink

      Hi Tej,

      While selling he is NRI. If this is the case then TDS will be applicable as suggested in this article i.e. 20.60% on property value.

      Reply
      • October 2, 2014 at 9:45 AM
        Permalink

        Thanks Soubhagya,
        But the seller is not an NRI now (for the last one and half years). So, would the TDS be at 20.6% or at 1% ?

        Reply
        • October 2, 2014 at 12:24 PM
          Permalink

          Hi Tej,

          If your are sure that the seller is not an NRI, then TDS will be 1% if property value is more than Rs. 50Lacs.

          Reply
          • October 2, 2014 at 1:18 PM
            Permalink

            Thanks again Soubhagya. The seller has filed his last year’s tax return (FY 2013-14) with Indian address. Can that be considered as a sufficient proof of him being a resident Indian? If not, which other document should I ask for to ascertain he is not an NRI now.

  • October 3, 2014 at 1:06 PM
    Permalink

    Thanks !… from what I understand after going through many articles on this subject , a certificate under section 197 of the income tax act will be required to be taken by the seller from the assessing officer, for deduction of tax at lower rate (1% and not 20%), and provided to me…. I hope I am right

    Reply
    • October 3, 2014 at 7:56 PM
      Permalink

      Hi Tej,

      You are mistaken. Certificate u/s 197 is applicable/required when seller is NRI. And it not sure how much will be the TDS. This will be decided by Assessing Officer.
      1% TDS will be for resident seller with more than Rs. 50Lacs property value.

      Reply
      • October 4, 2014 at 12:23 PM
        Permalink

        Ok..but i am still not clear on what should be my approach / next step. Which document will be a valid / legal proof that the seller is a resident Indian now? Should I anyway be asking the seller to approach the assessing officer and provide documentation on what would be the appropriate TDS for this transaction?

        Reply
  • November 1, 2014 at 11:43 PM
    Permalink

    Hello

    My question is if an NRI / British Citizen purchase a property from a developer is he liable to pay TDS if yes at what rate. If the NRI/British Citizen does not have a pan card what need to be done ?? Can they evade payment of TDS

    Reply
    • November 14, 2014 at 12:14 AM
      Permalink

      Hi Kaushik,

      PAN is very much required, but there are certain clauses where non-resident buyer is exempted to have PAN while buying property from resident seller. Here the seller needs to approach assessing officer for the same because deduction of tax at source without PAN of the buyer is not possible under form 26QB as stated u/s 194IA.

      Reply
  • December 24, 2014 at 12:00 PM
    Permalink

    Hi
    I want to know can a person get a certificate for lower deduction under section 197 without having TAN no.

    Reply
    • December 26, 2014 at 12:02 PM
      Permalink

      Hi Tushar,

      Yes! But do remember, assessing officer sometime asks for availability of TAN if TDS has to be deducted. In that case you can first go ahead applying for certificate (of course no TAN is required) and then basis AO’s advice you can act on.

      Reply
  • January 9, 2015 at 10:37 AM
    Permalink

    I just went through the article, it has one error though which I hope you dont mind my pointing out, regarding TDS deduction, you have mentioned when deducting TDS in a purchase from NRI the TDS amount is 20% of entire sale amount, that is not right, supreme court has ruled that TDS is to be deducted only on the capital gain component.

    Reply
    • January 9, 2015 at 12:04 PM
      Permalink

      Hi Mohit,

      Thank you for pointing out, but it’s not an error:-). I am talking about the provision u/s 195 which is refers remittance to non-resident (which also include remitting sum out of purchase of property from non-resident). So is the option to get certificate u/s 197 is given, so that deductor retain and pay tax as advised in the certificate. Hope you got this.

      Note: TDS or Payment of Tax on capital gains are not same thing.

      Reply
  • January 15, 2015 at 6:35 PM
    Permalink

    Hi,
    Can form 26QB be used for paying TDS in case the seller is a NRI.
    It has a provision to fill the seller’s PAN and address outside India. Is the rate for TDS 20% or does it include cess etc.?

    Reply
    • January 23, 2015 at 12:01 AM
      Permalink

      Hi Abir,

      Form 26QB is not applicable to NRI sellers. Yes, TDS will be applied at 20% plus cess

      Reply
  • February 7, 2015 at 5:24 PM
    Permalink

    Dear sir,
    I wish to purchase a property ,which is situated in bangalore . I have my PAN juridiction in Ananthpur, Andhra pradesh. I want to apply for TAN to deduct TDS . From where I should apply this TAN, whether application should go from the city where the property is located or from the juridiction where my PAN is located.

    Also state which provisions of income tax or other acts would apply in this case & send me through mail as earlier as possible

    Reply
    • February 7, 2015 at 9:16 PM
      Permalink

      Hi Srihari,

      The seller from whom you are buying the property is non-resident, right? In such case you should apply TAN which is very much easy to obtain through online application. It is not necessarily required to be within the same jurisdiction where the property belongs to. Apply it as per your PAN jurisdiction.

      Reply
  • March 8, 2015 at 11:56 AM
    Permalink

    Dear Mr. Kumar
    My father has bougt a plot property for 62lacks (govt. market 62 Laks) one year ago. He wants sell it now for 75 lacks, where as Govt. market rate is for 80Lakhs. How to compute Short term capital gains; will it have any indexation benefit? should we consider 80L or 75L for sale price. Are there any sections which can reduce tax liability. Kindly let me know.

    Reply
    • March 9, 2015 at 1:13 AM
      Permalink

      Hi Prasad,

      For tax short term capital gains on property there is no escape other than adjust with any other capital gain losses you have. With respective to amount to be considered for sale price for the purpose of calculating taxable gains, you need to take Rs. 80Lacs (I assume this what you will get from the buyer).

      Reply
      • March 9, 2015 at 7:15 AM
        Permalink

        My father gets 75L from the buyer; Govt. valuation is 80L.

        Reply
        • March 9, 2015 at 1:50 PM
          Permalink

          Dear Sir,
          Further, he has paid interest on borrowed capital to purchase the property. Can he claim it as capital loss or part of cost of improvement/acquisition?

          Reply
          • March 9, 2015 at 6:27 PM
            Permalink

            Hi Prasad,

            In that case, your father should pay tax on capita gains which should be calculated basis actual receipts i.e. Rs. 75Lacs (not on Rs. 80Lacs). Please note, if there is any visible difference between market rate and actual receipts on paper then the case may be called for verification. As long as you have all proofs to justify, you do not have to worry.

            Fyi, no interest paid will be allowed as deduction or as expenses to be claimed.

  • March 26, 2015 at 11:58 PM
    Permalink

    Dear Mr. Kumar,
    My father sold the property on 24/3/2015 which has short-term capital gains. What is the last date to pay short-term capital gain tax and filing returns. Pls let me know

    Reply
    • April 1, 2015 at 8:20 PM
      Permalink

      Hi Prasad,

      Taxes can be paid under self assessment tax before filing IT returns. Since the STCG fall during the Fy 2014-15, thus returns has to be filed before 31st July 2015.

      Reply
  • April 1, 2015 at 4:31 PM
    Permalink

    Hi

    I paid 1% TDS with interest i.e, @ 18 % p.a now i received notice from income tax Dept. to pay late payment fee, I call to toll free number Ghaziabad they informed about Challan No.280C but it is not available in googel, please suggest on this how to calculate late payment fee and how to pay the same.

    Gayathri

    Reply
    • April 1, 2015 at 8:37 PM
      Permalink

      Hi Gayathri,

      Since it requires quarterly TDS filing and supposed to be on time with right TDS amount, but you delayed in filing TDS returns, thus you not only have to pay interest, but also late fee for TDS returns filing. Refer below;

      As per section 234E of Income Tax Act w.e.f 1st July 2012, any delay in furnishing the eTDS statement will result in a mandatory fees of Rs. 200 per day, the total fees should not exceed the total amount of TDS made for the quarter. The late filing fee should be paid before filing such delayed eTDS statement.

      For payment of late fee- Just visit to https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp then click on Challan 281 -> Deductee Type (0021) -> enter required details with correct assessment year -> Select “(400)TDS/TCS Regular Assessment (Raised by I.T. Deptt.)” because you have got notice-> Select Bank -> On bank site, enter the amount under “Fee” section & make payment. That’s it 🙂

      Reply
      • April 2, 2015 at 4:21 PM
        Permalink

        SORRY

        I WAS ASKING ABOUT TDS ON IMMOVABLE PROPERTY .

        Reply
        • April 3, 2015 at 8:55 PM
          Permalink

          Hi Gayathri,

          I am saying the same thing. TDS on immovable property applicable for non-resident seller & you have received notice as late fee. Right?

          Reply
  • April 4, 2015 at 12:58 PM
    Permalink

    Hi

    Thanks for the support

    but in challan 281 it is asking for nature of payment what option i have to select.

    Reply
    • April 4, 2015 at 9:43 PM
      Permalink

      Hi Gayathri,

      Refer my response above. It’s (400)TDS/TCS Regular Assessment (Raised by I.T. Dept.)

      Reply
  • April 7, 2015 at 10:21 PM
    Permalink

    Dear Mr Kumar

    Thanks a lot for the very useful information; I have the following query

    I am selling my daughter’s flat as a POA holder.She is an NRI and has PAN No
    I have applied and got tax exemption certificate for lower tax deduction.
    The buyer will deduct tax and pay the amount thro challan 281 to Govt account.This challan does not give any information about the seller( name,Pan ,details of the property etc) on whose behalf he is deducting the tax.The buyer seems to have lot of time to file the TDS return in form 27Q.How is the seller to ensure the tax deducted is correctly linked to his account/PAN.Can the TDS return be filed the same day or immediately thereafter so that form 16A (Which is the only proof that tax has been paid to his account) can be given to the seller on the day of registration of the property

    Reply
    • April 23, 2015 at 11:30 PM
      Permalink

      Hi Seethalakshmi,

      Sorry for late reply!

      TDS paid under challan 281 u/s 195 will not have seller’s (deductee’s) information. You will get to know the details once TDS returns is filed under 27Q. Once the TDS is filed, you will get the acknowledgement from Buyer. 7-10 working days after that you can check form 26AS, you will able to see TDS details. Alternatively you need to ask form 16A to the buyer to provide.

      Reply
  • April 12, 2015 at 2:29 AM
    Permalink

    Hi ..
    I have bought a flat for Rs 60 lac. form a builder , I have paid him 4 demands yet , at different months in past 6 months . while i paid builder demand cheques , I didnt paid him the 1% tds amount so he has not deposited with govt. I want to pay now the full tds for the whole consideration value , can i pay all together tds for full consideration value ??.
    also from penalty on tds perspective I understand i have to pay 1.5% pm . Pls advise is it per installment and the delay in months from the paid time till now.

    for example if supposed tds to be paid was 5000/- and 6 months passed by since i paid the total amount ,then now i have to pay Rs 5,300/- for the tds payment.

    Reply
    • April 23, 2015 at 10:42 PM
      Permalink

      Hi Nitin,

      You were supposed to pay TDS as installment as per the payments you made. Since you missed, you can now pay at once along with calculating interest starting from the following month of payment till date. This means, you calculation is correct 🙂 I hope your question is related to TDS u/s 194IA applicable to resident seller.

      Reply
  • April 18, 2015 at 3:44 PM
    Permalink

    Hi,

    Very informative and useful article and so are the comments.

    I am a NRI selling a property in Tamil Nadu. My PAN card shows a jurisdiction of Rajasthan. This was a mistake by the PAN issuing authority. So I’m in a peculiar problem. I cannot apply for change of address, as my address is correct. How do I go about getting a nil tax deduction certificate for the sale as there is no LTCG. Is it possible for me to hire a CA in Rajasthan to get a nil tax certificate from AO there and then give it to my buyer in Tamil Nadu? If I need to change the AO jurisdiction to Tamil Nadu, do I need to hold the sale deal till this is done or can I conclude the deal first and then try to get the PAN mess sorted? Please advise. Thank you.

    Reply
    • April 22, 2015 at 11:15 PM
      Permalink

      Hi DSouza,

      You can conclude the deal having Rajasthan jurisdication itself. That won’t be any problem. Just take help of any CA there. Transfer of jurisdiction is also not a cumbersome task. You can ask Rajasthan CA to request assessing officer for transfer of jurisdiction. It will be done.

      Reply
  • May 14, 2015 at 7:52 PM
    Permalink

    Hi.
    First of all, I’d like to thank you for this informative article.
    Secondly, I have a pressing query that needs urgent way out.

    I have a client who has purchased an immovable property from an NRI seller. The problem is, that the seller(NRI) does not have PAN. Can you please guide as to what ought to be done in this case?
    How to go about things? What procedure to follow for TDS payment?

    It’d be really helpful if you lend an insight on this matter.

    Thanking you in anticipation.

    Reply
    • June 16, 2015 at 8:07 PM
      Permalink

      Hi Nishit,

      Thank you for appreciating. And sorry for late response!

      If the seller doesn’t have PAN, then it doesn’t stop the transaction. Buyer can still deduct tax, pay TDS as per section 195. The trouble is for the NRI seller that he can not claim back the TDS amount which requires him to have PAN and then file his IT returns. Another important thing is without PAN TDS filing will also get affected. In case of delay or non filing of quarterly TDS returns, it will lead to penalty & interest. This will be a negative part for the buyer.

      Reply
  • May 25, 2015 at 10:28 PM
    Permalink

    H Soubhagya,

    Very informative article.

    We are planning to buy a property in Mumbai which is valued more than 50 lakhs. The seller had been living out of India from past 5 years but has suggested that his status is still Indian as he has been filing his returns in India as Indian resident. Seller is suggesting me to deduct TDS at 1% instead of 20.6%. Please let me know which all documents are required to confirm if he can sell based on his Indian status. Also, please suggest if such transactions are possible. I am confused as we want to close the deal within this week and this has become a big hurdle.

    Please advice at the earliest.

    Thanks.

    Reply
    • June 12, 2015 at 2:01 PM
      Permalink

      Hi Usha,

      If he has been staying out side India for 5 years then he could be anything, but not a Resident Individual at least. And in this case TDS @ 20.60% becomes mandatory.

      Reply
  • May 27, 2015 at 1:12 PM
    Permalink

    Hi Soubhagya,

    We are planning to purchase a flat in Mumbai (> 1 Cr) and the seller has been staying oversees from past few years. He has suggested that his status is not changes to NRI (still Indian) and he has been regularly filing his returns in India.

    In this scenario, should we deduct TDS at 1% or 20.6%? If we can deduct TDS at 1%, then what all documents we need to check to make sure his status is still Indian. Please advice. Thank you.

    Reply
    • June 12, 2015 at 1:37 PM
      Permalink

      Hi Priyanka,

      It will be risky going just by the declaration of the seller that he is a Resident Individual, but not an NRI. Here I would suggest you to take help of expert.

      Reply
  • June 20, 2015 at 5:06 PM
    Permalink

    Hi Soubhagya ,

    Very informative website i would say. I have one basic clarification. I want to know if iam purchasing a property from an NRI then i need to cut TDS of 20.6%. But let me know if he still has to pay LTCG tax ? Do i need to take a proof of that also from the seller ?

    Rgds
    Ajit

    Reply
    • June 21, 2015 at 11:04 AM
      Permalink

      Hi Ajit,

      You don’t have to see what tax under LTCG has been paid or to be paid by the NRI seller. If seller furnishes a letter/certificate (as explained in this post) from AO instructing how much tax needs to be deducted (can be lesser than 20.60%) then do it accordingly else you have to still go with deducting 20.60% tax.

      Reply
  • June 30, 2015 at 2:58 PM
    Permalink

    Hi Soubhagya,

    Thanks for an informative article. I have the below query.

    We are buying a property from and NRI seller in Pune. As per the rule, we have informed them that TDS of 20% would be deducted for this transaction based on the agreement value.
    Any additional amount paid as TDS would have to be claimed back by filling a return. However, they don’t want to pay such high TDS amount and are asking for alternate option.
    One option suggested by CA was to get Lower tax deduction certificate. However, since there PAN jurisdiction is Gujarat they are unable to get that in the short duration.

    So CA suggested that we can submit Form 15CB and Form 15 CA under section 195(6) and accordingly deduct less TDS (actual TDS come to only about 1.5%). However, we are not sure if this applicable for immovable property. Could you pls. let us know if this is a valid approach?

    Smita

    Reply
    • June 30, 2015 at 11:04 PM
      Permalink

      Hi Smita.

      I don’t know why CA suggested to submit Form 15CA & 15CB. These are only applicable while making remittance to non-residents. How is it relevant wrt TDS matter as per your case? It’s certainly an invalid approach.

      Reply
  • July 19, 2015 at 2:17 PM
    Permalink

    Sir NRI is selling Flat .Flat is in joint name Himself ( NRI ) and his wife ( Resident Indian).All funsds at the time of purchase had come from NRI .Wife’s name is included for convenience purpose only in purchase agreement . Will the TDS will be applicable on the basis of NRI seller only .Though the sale agreement to be executed will have resident wife also as seller.
    Sanjay

    Reply
    • July 26, 2015 at 12:23 PM
      Permalink

      Hi Sanjay,

      Since the source of fund was from NRI, thus TDS will be applied.

      Reply
  • March 30, 2017 at 12:29 PM
    Permalink

    Please provide your contact details and office address.

    Reply

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