Hello Everyone! I am about to buy a property from an NRI based in Australia. The property papers have joint name of he and his wife. The NRI has an NRO account in India. But that NRO account is not joint account. Its just in his name. I have the following questions: 1. Is it okay if the payment is made from my Indian HDFC Saving / Current account to his NRO account? 2. I have asked him to convert his NRO account to joint account by adding his wife's name. Because I think that logical because property is in joint name. 3. How much is the TDS that has to be paid? What the procedure for the same? 4. What about the Long Term Capital Gain Tax involved in this case? Though its not my concern, I would like to know more about it. 5. He is perusing me to make the payment totally in the NRO account which is in his name. I think thats not legally and commercially right, because property papers have joint name. Please advise on this too. Thanks in advance for the clarifications.
Hi
You can make the payment in his account. Her wife's name could be just on papers; the NRI account holder being the real owner of the property.
You need to deduct TDS @ 20.8% in case it is LTCG for him. You need to obtain a TAN first. Deduct and pay TDS and find TDS return.
For calculating the LTCG, indexed cost of acquisition is reduced from the sales consideration.
Dear Sir,
1) Yes there is no issue.
2) Ideally it should be but you can make payment to his NRO account. It is more of concern for the seller.
3) TDS needs to be deducted on the purchase amount and not on capital gain. Basic rate is 20% plus surcharge(depends on the amount) plus cess of 4% i.e. if I assume NIL surcharge then it is 20.8% of sale consideration. After deduction you need to deposit through challan cum statement.
4) That is the liability of the seller. Figures are not available to comment.
5) You should ensure that the payment should go into the account of the person whose name is appearing in the sale deed.
Thanks
Hi,
- Also collect residency proof documents from the seller as he is NRI. Collect copy of passport or ask certificate of CA in respect of his residential status in the year of transaction.
- You need to file TDS return in the form of 27Q for which you need to obtain TAN (tax deduction account No.).
Thanks
Hello,
Please find below the answers to your queries:
1 Yes there is no issue in such transfer
2 There is no problem if you transfer the money in his account. What is important is that the sale deed should have both the names and their consents.
3. TDS needs to be deducted @20.8% of the total sale amount. Obtain a TAN, pay TDS to the Government and file the TDS return.
4. Capital gains is computed by deducting the indexed cost of acquisition from the sale proceeds.
5. That should be okay.
Hope that resolves your queries.
Regards,
Nikhil
Payment must be made in the name of seller so in jt name no problem it is SB or CA you have to deduct 1% TDS of sale consideration there is no min limit of Rs 50 lax as it is applicable in case of Resident only in case of NRI no such limit refer section 195 & Rule 37BB
Dear Sir,
Hope you are doing well !
1. It is okay. There is no problem at all.
2. Logically it should be but you can make the payment in his NRO account. It is not your concern.
3. Tds needs to be deducted on the purchase price @ 20% plus applicable surcharge and 4% cess. But you should first obtain TAN under section 203A of the Income Tax Act, 1961 before deducting TDS. You can apply for TAN online by filing Form 49B. You may click on following link to apply for TAN
https://tin.tin.nsdl.com/tan/
You need to file TDS return in the form of 27Q.
Besides TAN, you should have your own PAN and PAN of NRI Seller to deduct TDS under section 195.
4.To calculate the long-term capital gains tax payable, the following formula is to be used:
Long-term capital gain = full value of consideration received or accruing – (indexed cost of acquisition + indexed cost of improvement + cost of transfer), where:
Indexed cost of acquisition = cost of acquisition x cost inflation index of the year of transfer/cost inflation index of the year of acquisition.
Indexed cost of improvement = cost of improvement x cost inflation index of the year of transfer/cost inflation index of the year of improvement.
5.The payment should go into the account of the person whose name is appearing in the sale deed. If the sale deed is in his name then there is no issue.
Thanks & Regards,
Payal Chhajed
So Sale Deed has couple's name. And payment just to Husband, is that okay? What if wife complains later on if there is some dispute between them. So I am insisting, payment to be made to Joint Account. What you think?
Hi,
Sale deed will also contain the mode of payment and it will be signed by both the parties which in itself is an acceptance. Additionally you can ask for the undertaking and acceptance from his wife for payment to her husband account.
Thanks
Hi,
No, it is not okay.You should make the payment in joint account.
There are some legal and financial implications in such a case that need to be taken care of so as to avoid disputes.
However, If you can get the NOC from his wife then it may be helpful.
Thanks & Regards,
Payal Chhajed
There is no issue as such. The sale deed shall also mention the payment details which shall be signed by the wife too.
You need not worry. It won't be your liability in case of dispute between them.
I dont think there is any issue. As mentioned earlier, the sale deed has both their names as consenting parties to sell the property and it will also have the mode of payment. So there is no issues.
However, if you really want, you can take a NOC from the wife.
Exactly same payment must be in joint name to avoid any future dispute with co buyer & ITD also
Hi,
As per Income tax act, if the property is being sold by NRI who does not have PAN the TDS needs to be deducted @20%, whereas for an Indian citizen the tds needs to be deducted @1% by the buyer of the property if the sale consideration exceeds Rs. 50 lacs.
Based on above below are replies to your queries:
1. You can directly transfer the amount in his name or in his wife's name after ensuring that she has power of attorney signed by her husband to collect the money and sell the property as he is joint owner of the property.
2. The TDS percentage are shared above, fow which you to obtain TAN(Tax deduction A/c No.
) deduct tax,deposit the same under their respective pan's and file return in form 26QB.
3. w.r.t to ltcg it is essential to knw the purchase price, year in which was purchase made by the seller and the sale price. He can claim indexation benefit and arrive at the net capital gains chargeable to tax.
We can help you with the compliances.
sshahassociates.com
Dear Sir,
1. Yes, it is absolutely ok.
2. There is no problem if you transfer the money in his account only.
3. You need to deduct TDS @ 20.8% on the purchase price. You need to obtain a TAN first.
4. Long term capital gains is calculated by deducting the indexed cost of acquisition/indexed cost of improvement from the full value of consideration.
5. It is okay because the payment details will be there in sales deed. If the sales deed will be signed by his wife too then there is no issue as such.
