• Tax deduction for NRI (as seller) for unregistered flat in Bangalore

Hi - I am a non-resident Indian who has found a buyer for my unregistered 2 BHK apartment in Bangalore. The sale process has started - I have made an SPOA for my brother in law who will represent me in the sale. The tripartite agreement has been prepared between me, the buyer, and the builder. I was about to file for an LDC with the Income Tax Department when my buyer's lawyer told me we do not need to get a Tax Deduction Certificate since this is the resale of an unregistered flat. 

So I am a bit confused here about how I should pay my taxes and when. Since it's a sale with NRI as seller, I was under the impression that the buyer would pay the tax and then deduct that from the total sale price. Any leads on the payment of tax - the entire process - would be helpful. Thanks in advance.
Asked 2 years ago in Capital Gains Tax

Yes I can help you on that. 

Vidya Jain
CA, Kolkata
1009 Answers
58 Consultations

4.8 on 5.0

- LDC has no relation with registration of the flat. You can apply for LDC and buyer would be liable to deduct TDS as per LDC otherwise buyer would be liable to deduct TDS on total sale consideration payable to you instead of the capital gain amount and later on you can claim excess TDS deducted while filing the ITR.


I can assist you in the entire process. For detailed discussion you may opt for phone consultation.

Vivek Kumar Arora
CA, Delhi
4838 Answers
1037 Consultations

5.0 on 5.0

As per Section 195, any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest (not being interest on securities) 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.

In other words, when any person purchases an immovable property from a non-resident, TDS is required to be deducted on the amount of the capital gain (not on the sale proceeds) arising to such non-resident as per Section 195 of the Income Tax Act.

Note: – Section 194IA (TDS @1% on all the immovable property transaction where the consideration exceeds Rs. 50 Lakhs) is applicable only when the property is purchased from Resident Indian.

TDS Rates

The rate of TDS depends on the nature of capital gain arising to the non-resident which are as follows: –

Long Term Capital Gain –If the property is held for a period of 2 years or more then the gain arising to the non-resident is long-term in nature and taxable @ 20% (plus surcharge and cess).

Shiv Kumar Agarwal
CA, Delhi
489 Answers
74 Consultations

5.0 on 5.0

Dear Sir,


Hope you are doing well !!


We may assist you in entire procedure.


It is advisable to take a phone consultation for detailed discussion. 

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

Yes, buyer will deduct 20% tax if it is a long term capital gain and deposit with the department. You will have to file your ITR for the relevant FY.

Ruchi Goel Anchal
CA, Gurgaon
525 Answers
16 Consultations

5.0 on 5.0

You are basically selling rights in property and not actual property and you must be having an agreement with builder.


So you need to pay capital gain tax on selling rights of property.


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

Thank you.

Naman Maloo
CA, Jaipur
4271 Answers
97 Consultations

5.0 on 5.0



The buyer shall deduct taxes @20% + surcharge and cess on the sale proceeds. 

You will be required to calculate the capital gains and make a computation of income and calculate the taxes. The taxes deducted by the buyer would be higher than your actual tax liability in general circumstances. You would have to file your income tax return and claim refund of the excess taxes deducted.

Lakshita Bhandari
CA, Mumbai
5687 Answers
909 Consultations

5.0 on 5.0

Dear Sir,


You can obtain the LDC and the buyer would have to deduct the tax as per the LDC. In case you are not obtaining LDC, the buyer needs to deduct at 20% + surcharge and cess. The buyer may deduct the tax on entire sale consideration instead of capital gains. You need to file your ITR to claim the refund of taxes. 


In case of detailed consultation, request for telephonic consultation.

Prerna Peshori
CA, Pune
194 Answers
11 Consultations

5.0 on 5.0

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