There are so many questions in the mind of an NRI seller when he is selling any property (commercial as well as residential) in India. After all, all his hard earned income is at stake. Obligation for TDS arises at the time of sale of property in India. The TDS rules are even more complex when it comes to Non resident seller. Here, in this article I will try to simplify the intricacies of TDS rules in easy manner.
First of all, lets make it clear, here we are considering a Non resident seller and a Resident buyer.
Who is liable to deduct Tax?
The primary responsibility to deduct TDS is of Buyer. Buyer is required to deduct TDS u/s 195 at appropriate rates. In case of failure, he should be ready to face the consequences in the form of Interest and Penalty.
Amount of sale transaction
Any amount of sale transaction involving NRI seller will attract TDS provisions. But if there is only Resident seller, no TDS is required if sale proceeds are less than 50 lacs rupees.
Rate of TDS
TDS is deducted depending upon the nature of asset. To know more refer to our previous post Tax Implications for NRIs selling property in India
20% TDS on Long term capital asset.
30% TDS on Short term asset.
How NRIS can lower their TDS liablity?
Unfortunately, TDS is calculated on Sales value and not on capital gains. So, even if seller is incurring any capital losses, he ends up paying huge amount taxes in the form of TDS on sales value. This issue can be dealt in two ways. Firstly, seller can avoid paying higher TDS by applying Lower Tax Deduction Certificate. Lower TDS Certificate can be applied by NRI seller to his jurisdictional Assessing Officer. This certificate is generally issued within 30 days of time, on being satisfied with all the documents submitted by Seller with required Form. To get Lower TDS Certificate contact us.
The other way is to claim refund of excess taxes withheld later on, by filing Income Tax Return.
Is TAN Mandatory?
Yes, it is mandatory for the buyer to quote TAN.
When is TDS deposited?
Tax deducted has to be deposited on or before the 7th working day of next month, failing which will attract interest.
We also assist in computing Capital Gains and filing TDS returns. Need to Apply Lower Tax Deduction Certificate or Tax Exemption or NIL Tax certificate, reach us.
