Property purchase from NRI-managing TDS

Dear Sir,

In case of purchase of property worth more than Rs. 50 lacs you need to deduct TDS @ 1% and submit it to department.

Also take care of document value and payment of proper stamp duty.

Another most important thing is registration of documents with department.

You need to deduct tax u/s 195 and upload 15CA under your login along with the 15CB to be submitted by the seller obtained from his CA. 15CB basically gives the details of tax liability, which has to be deducted. You can then issue TDS certificate after filing 26Q.

Hi,

You are required to deduct TDS @ 20% if the NRI sells property after holding property after 3 years . In case the property has been sold before 3 years from the date of purchase a TDS of 30% shall be applicable.

Tax so deducted should be deposited to the Government Account trough e-tax Payment option (Net banking) or any of the authorized bank branches. Any sum so deducted under section 194 IA shall be required to be paid to the credit of the Central Government within a period of seven days from the end of the month in which the deduction is made.

PAN of seller as well as buyer should be mandatory furnished in an online Form 26QB for furnishing information regarding the property transaction.

TDS certificate in Form 16B is required to be issued by the Buyer of property to the Seller, in respect of the taxes deducted and deposited into the Government Account.

TDS on the entire amount or on the payment of each installment: Tax needs to be deducted at the time of payment either it is payment of entire amount or installment. If the payments are being made in installments then at the time every installment payment.

Dear Sir,

In case of sale of property by NRI, it is mandatory for buyer to deduct 20.66% TDS on the sale price of the property if capital gain is long term capital gain. In case of short term capital gain, TDS will be 33.99% irrespective of income tax slab of NRI as i mentioned earlier also. Buyer will deposit TDS with Income Tax Department and comply with Form 15CA/CB requirements.

TDS is applicable even if value of property is less than 50 lakhs. For resident Indian seller TDS of 1% is applicable only if the property value is more than 50 lakhs.

Now anomaly in this rule is that NRI is liable to pay Capital Gain Tax only on the Capital Gain arising out of sale of the property but unfortunately TDS is deducted on the total Sale Value of the property. Therefore in most of the cases there are no GAINS as such from the sale of property and actually NRI incur LOSS from the sale of the property if TDS refund is not claimed. As a result, NRI has to go through the process of claiming TDS refund from Income Tax Department.

Please feel free to call/ revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Hi,

Payment to Non-Residents is governed by Section 195 and not 194-IA.

So, you will have to make TDS at 20.6% on the entire amount of Capital Gains accruing to the NRI. If you are unable to get the Capital Gain Amount, kindly approach jurisdictional TDS Officer u/s 195(2) and ask him to determine the amount chargeable to Tax in India. You will then have to make TDS on the amount so determined as taxable.

Note: You will have to first apply for TAN, in case you don't have one. TAN is mandatory for TDS u/s 195.

When a Non-resident sells an Immovable property in India, Capital gains income may accrue on such sale to the Non-resident which is chargeable to tax in India. Therefore, the consideration from sale of property in India by a non-resident is chargeable to tax in India and is covered by Section 195 and therefore tax has to be deducted at the time of payment of such consideration.

Thus you need to deduct the Tax payable by NRI as capital Gains. i.e. calculate the capital gains tax of NRI and the total capital gains you need to pay by taking TDS Account No. i.e. TAN in your name.

First apply for TDS (TAN ) Number.

Calculate the capital gains of NRI through CA or consultant.

You pay the Tax as arrived as capital gains.

Pay the challan through the TAN Number and upload.

You need to give certificate to the NRI for the payment done.

You can deduct TDS after total Payment is made less the capital gains tax.

Dear Sir,

From each and every payment you made you need to deduct TDS. No TAN is required for the same only form 26QB to be filed.

Bank dont do any TDS its you who have to make lower payment and pay TDS out of your own portion

TDS need to be deposited on or before 7th of next month in which you have deducted TDS.

Hi,

you do not required to obtain TAN number.

please go thru the link given below: it explains how to file 26 QB

https://reviewofweb.com/how-to/fill-26qb-and-download-16b-form-traces/

https://www.tin-nsdl.com/download/TDS/eTutorial_TDS%20on%20property_etax-immediately.pdf

these sites are giving practical guidelines for how to fill the forms.

if you had paid 51000/- in the month of march then your are required to pay TDS (20% / 30%) by 7th April 2017.

based on whether the property comes under long term or short term capital gain.

please feel free to call me at 9538801976, i will explain you the whole process.

Hello Sir,

It is your responsibilty to deduct TDS on the entire Sale proceeds that is your share as well as the Bank Loan part. Please Deduct TDS @ 20.6% and pay it to the credit of the government within 7 days following the month in which agreement/ payment is made.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

If payment is made in installments then it has to be done at every stage.

Step No. 1

As you are purchasing property from a Non Resident, you need to deduct tax u/s 195 and not u/s 194LA. Hence, you need to obtain TAN.

Step No. 2

Please obtain 15CB from the Chartered Accountant of your vendor. As mentioned earlier, 15CB gives the amount of tax deducted.

Step No. 3

Deduct the tax as per 15CB and remit it. You can even complete the registration after deducting tax without waiting for other steps to be completed.

Step No. 4

Pl. upload 15CA duly filled in with the incometaxindiaefiling.gov.in under your log in. You will be able to upload 15CA only after giving your TAN.

Step No. 5

File 26Q and issue TDS Certificate to the vendor.

Hi,

You have already paid advance of 51k without TDS. So, there will be interest at 1% per month for failure to deduct TDS.

Tax is to be deducted before making any payment to Non-resident. Rate of TDS in this case is 20.6% on Long-term Capital Gain amount (20% Tax and 3% EC on the Tax Amount).

Regarding TDS on the Bank Loan amount, you can ask the Bank to pay the TDS u/s 195 using your TAN and pay only the net amount to the non-resident Seller.

Due date for Depositing the TDS amount is 7th of next month (For TDS done in the months of April to February) and 30th April (For TDS Done in the month of March). Failure to deposit TDS deducted within the due date attracts interest at 1.5% per month.

You will have to file Quarterly e-TDS Return in Form 27Q for every quarter in which TDS is made u/s 195. Due date for TDS Return is end of the month following the quarter (i.e 31 Jul, 31 Oct and 31 Jan for Q1 to Q3 of the FY) and 31 May for Q4 of the FY. Failure to file TDS Return within due date attracts Late Fee u/s 234E at Rs. 200 per day of delay subject to the maximum of Tax Deducted/Deductible in the respective quarter.

Sir There is confusion to many in this I.e if we buy property from resident and NRI. Both r different and the tds section is 195. since we r dealing with the subject from many years practically and also with NRI, TAN is must. If you need more clarity please mail us on modani005@gmail.com

When the property is purchased from a resident, tax is deducted u/s 194LA and for this purpose TAN is not required. However, if the property is purchased from a non-resident, tax is deducted u/s 195, in which case TAN is required. In your specific case, you are purchasing the property from a Non Resident.Hence TAN is required.

Hello Sir,

TAN is very much required. You cannot file returns otherwise.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Hello Sir,

I have gone through the trail answered by various experts and I have noticed that they are advising you to file Form 26QB for which TAN is not required. But the issue is that the form 26QB is only for resident Indians i.e cases in which TDS @ 1% should be deducted.

You may check Form 26QB yourself and you may note that it will not allow you to change the rate of TDS from 1% to 20.6%, that itself will solve your query/ confusion and provide clarity to you.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Hi,

TAN will be required as your case is not covered under section 194-IA and hence, you will not be filing Form 26QB.

Regards

Keerthiga

M.Com., CA., LLB

TAN is not required for deducting TDS u/s 194IA

For TDS u/s 195, TAN is mandatory.

Dear Sir,

Please find below corrections :

1. Obtain TAN numbers for my wife and myself - NO NEED TO GET TAN

2. Pay 12 Lakhs to Seller after deducting TDS @20.6% (not @20.66%) and do the part agreement registration.

3. Is it necessary to pay only in NRO account? - NO

4. Submit the part agreement to the bank and ask bank to issue three DDs splitting the remaining 61 Lakhs. 48.43 Lakhs in the name of seller and 12.56 Lakhs in my name and my spouse's name. Is it OK if only one buyer deposits the entire TDS? - NO BOTH THE BUYER HAVE TO DEPOSIT TDS AS PER THEIR SHARE

5. Get the final sale deed registered.

6. Deposit TDS through ITNS/281 through NSDL Portal. Both the buyers will do this. - YOU NEED TO DO THIS BEFORE YOU GET DEED REGISTER. THEY WILL NOT ALLOW YOU TO REGISTER UNLESS YOU HAVE PAID TDS AND FURNISH FORM 26QB.

7 File TDS Form 27Q before June end. - NO NEED TO FILE ANY FORM THEREFATER

8. After filing the return the buyer has to issue a Form 16 A to the seller. By what date? - NO NEED TO DONE THE SAME. STRAIGHT AWAY THE PERSON WILL GET CREDIT ON FILING FORM 26QB.

9. Ask the seller to return the 51K token paid by cheque or cash.

10. This will complete the transaction. Is there anything else which is required or is incorrect. Some of you have mentioned about 15CA. - NO ITS NOT REQUIRED BY YOU.

hi,

TAN is not required.

You are required to file TDS return by filing for 26 QB.

Yes,you deposit TDS through ITNS/281 through NSDL.

If both of you are paying money from your own sources then both of you are required to pay and file TDS returns.

otherwise just because both owners name are in the sales deed , it is not required.

if you are depositing money in India there is no need of 15 CA or CB.

In my last reply i had shared few links kindly read them .

it doesnt make much difference in sales transaction just because seller is NRI.

Dear Sir,

1. TAN number is not required for this TDS deuction.

2. You have to deduct TDS on entire sale consideration and not on 12 lacs.

3.No

4. Ideally both the buyer should deduct TDS to avoid litigation

1. Correct

2. You have to deduct TDS at 20.6% on the Capital Gain amount only. Ask the seller to provide Capital Gain calculations.

3. There is no such restriction. You can pay by any mode other than Cash. You can deposit the amount into NRE Account of the seller also

4. No. The TDS is to be made by each buyer on his/her share paid

5. Correct

6. Correct. Each person to deposit his/her share only

7. If you are paying the TDS in Apr-Jun Quarter, then the due date for filing 27Q is 31-Jul.

8. Form 16A to be issued within 15 days from the due date (i.e Aug-15 if due date is 31-Jul)

9. Correct

10. Yes. 15CA is to be filed. Also since the amount paid exceeds Rs. 5 Lakhs, you will also require to obtain CA Certificate in Form 15CB.

Yes sir that is fine. Both should pay tds.

15CA is applicable when the seller send the money abroad. In your case you need not worry. It is the seller who takes care of the same.

Regards

CA Shyam Modani

No problem . Since it does not form part of the sale deed you can take the same back. It will not be taxable.

Yes sir , if you do so than it will be consider as compliance of income tax act

Hi,

If the seller is ready to return the 51K advance, then you can go ahead with the same

I assume that the token amount was paid when the property was not actually purchased but intended to be purchased to show your seriousness in the transaction and it could have been based on simple agreement for sale. However, the issue is deduction of tax u/s 195, which is attracted when the payments are made to any non resident. You may deduct TDS now and pay with interest.