TDS to be deducted while buying property from NRI

Hi,

It should be deducted on total sales consideration i.e. on Rs. 75 lakh.

You should deduct tds @ 20% of total consideration i.e.75 lakhs.

Hi,

The TDS is required to be deducted on the Capital Gains. The seller will himself tell that the amount of Capital Gains arising in his hands from sale of this property. The seller shall intimate the buyer of the Capital Gains arising in his hands and the buyer will deduct the TDS accordingly.

However, this computation of Capital Gains cannot be done by the Seller himself and should be done by the Income Tax Officer. The seller shall approach his Income Tax Officer and request him to compute his Capital Gains.

The Income Tax Officer shall compute the Capital Gains of the seller and intimate the seller by issuing a certificate mentioning the computation of Capital Gains. The seller is required to give this certificate to the buyer and the buyer will deduct the TDS on the Capital Gains arising to the seller.

In case this certificate is not obtained by the seller from the Income Tax Officer, the TDS should be deducted on the Total Sale Price and not on the Capital Gains. Therefore, it is very important for the seller to obtain this certificate from the Income Tax Officer.

My previous answer was based on without having certificate from the ITO.

Thanks & Regards,

Payal Chhajed

You need to obtain calculation sheet certified by the Assessing officer. Then you can deduct TDS on Capital Gain portion

Hi,

Unless the seller approaches the tax official concerned, gets the calculation done and produces a certificate proving the same, you as a buyer are supposed to deduct TDS on the entire transaction value.

The calculation of the capital gains needs to be certified by the AO. if he certifies the same, it should be okay for you to deduct 4 lakhs or whatever amount he cerifies as TDS.

Yes he is partly Correct in case of NRI TDS needs to be deducted at 20% on the amount of capital gain but that capital gain figure is to be certified by his area assessing officer and not his CA and if he is not providing you such certificate then you need to deduct TDS @30% on sale consideration.

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Thank you

Hi,

- As you are purchasing property from NRI, it is advisable to get all the required documents from the seller i.e PAN card, local address proof if any of him or his relatives, copy of passport, copy of Visa, property documents etc.

- You are liable to deduct TDS @22.8% on 75 lacs.Seller will file the ITR and claim refund if any.

- For deduction at lower rate ,ask seller to furnish certificate under section 197 for deduction at concessional rate. Certificate is issued by the department and will carry your name and PAN.

Thanks

sorry wrongly posted here

Hi,

As per Income Tax Act,1961 the buyer has to deduct TDS on Sale consideration and not on Capital Gains derived by the seller.

The TDS so deducted and deposited by you shall be available to the seller and he can claim refund while filing his Return of Income.

That is upon the seller to do so. You being buyer, you need to deduct TDS @ 20% on 75 Lakhs.

Hope this resolves your queries.

Regards,

Siddhant Shah

Hi,

The seller's contention that the Tax payable on 4 lakhs is chargeable under the head "Capital Gains".

Whereas your obligation to deduct TDS is covered under section 195. Both are related yet different.

The seller can however apply for Tax Exemption certificate/lower tax deduction certificate from Income Tax Department. But since, the same is not done you need to deduct TDS @ 20%.

Thanks & Regards,

Siddhant Shah.