NRI selling a land to Indian Resident FY 2019-2020

NRI selling a land to Indian Resident FY 2019-2020

Tax @ 23.92% (Tax plus surcharge plus cess) on the Gross property sale consideration, paid to IT Dept by way of challan prior to property registration by buyer.
Buyer under his Pan No the form 26AS, however reflects (As of this date) under part G TDS default statement an amount which represents 15.38 % on the Gross sale consideration
Seller filed the tax return for the FY 2019-2020 (on 17 July 2020) and is awaiting tax refund after applying Indexed cost to the property sold.
Question is 1) Can the IT Dept seek more than the 23.92% tax as TDS amount. 2) Now that the seller tax returns has been filed, how and when the 26AS form statement will get corrected under the buyer's PAN.

Asked 5 years ago in Capital Gains Tax

Dear Sir,

Hope you are doing well !!

1. Where a resident makes a purchase of a property from an NRI, TDS is deducted at the rate of 20% (plus cess and surcharge, as applicable) if there are long-term capital gains; the rate is 30% (plus cess and surcharge, as applicable) in case of short-term capital gains.

So, IT department can't ask more than that.

2. There is no specific timeline mentioned in the income tax laws which states by when such mistakes must be rectified. However, it can take 30-45 days to reflect the same.

You can correct the same online.

We may assist you in entire procedure.

Payal Chhajed

CA, Mumbai

5189 Answers

303 Consultations

Talk to Payal Chhajed

Hi,

I dint understand why only 15% TDS is reflecting when it was deducted @23%. It seems TDS return has been filed incorrectly.

Frankly, IT department can come up with any query and ask you to pay more TDS if the TDS return is not filed correctly.

26AS will be corrected when you revise TDS return. Post that, buyer will need to revise its tax return.

We can help you in the entire process.

Lakshita Bhandari

CA, Mumbai

5687 Answers

943 Consultations

Talk to Lakshita Bhandari

Hello,

Assuming that the gain on sale of the property was long term capital gain, the TDS deduction was required at 23.92%. The It Department cannot ask you to pay more TDS.

However, since Form 26AS reflects only 15.38% as TDS, the TDS return might have been filed incorrectly, which needs to be revised.

Form 26AS will get corrected once the TDS return has been revised with correct declarations.

I hope this answer satisfies your requirements.

Regards,

CA Hunny Badlani

Hunny Badlani

CA, Madhya Pradesh

2608 Answers

16 Consultations

Talk to Hunny Badlani

If TDS was deducted at 23.92 I am assuming 15% surcharge has been applied.

I didn't the line about the default of 15.38%. What has that to do with seller. That default could be interest, penalty anything for which buyer is liable.

Also why TDS was deducted on sale consideration and not capital gain?

IT department cannot demand anything other than capital gain on sale of property from seller.

We can discuss this better if you book a phone consultation.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo

CA, Jaipur

4303 Answers

101 Consultations

Talk to Naman Maloo

TDS applicable on sale of property is 1% of sale value if sale value exceeds 50 lakhs. Capital Gain will be Sale value less indexed cost of acquisition. If excess TDS is deposited it can be claimed as refund by the seller by revising the return.

I hope I answer your query.

Ruchi Goel Anchal

CA, Gurgaon

525 Answers

16 Consultations

Talk to Ruchi Goel Anchal

It can be due to wrong filling of TDS return, practically the remedy for rectifying the mismatch lies in requesting the deductor to reconcile the same. Once the deductor files the TDS return with correct information of the deductee, the same will automatically appear in Form 26AS of the deductee."

No department can't ask more than that.

For more details discussion please have a phone consultation.