• Buying from OCI

I am planning to buy a house Along with fixtures and furniture and the surrounding land it is built on from a British national of Indian origin having oci, pan card, aadhar card. The sellers had purchased the said property in 2005 from an Indian citizen. 
1.What tax deduction should I do from the payable amount? 
2. What permissions do the sellers need from RBI, IT or any other Govt authority prior to selling.
3. can i credit into an NRO account
Asked 4 years ago in Property Law
Religion: Hindu

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14 Answers

Section 195 of income tax act provides that : 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

2) you have to deduct 20.66 percent TDS on sale price even if value of property is lss than Rs 50 lakhs

3) 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. If there are no GAINS 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.

4) NRIs are allowed to remit up to $1 million from the sale proceeds of property in India from their NRO account.

Ajay Sethi
Advocate, Mumbai
87894 Answers
6207 Consultations

5.0 on 5.0

Yes payment via NRO will be fine after deduction of TDS on capital gain.

No RBI permission is required.

Vimlesh Prasad Mishra
Advocate, Lucknow
6848 Answers
23 Consultations

4.9 on 5.0

Dear Sir,

Your purchase is legal but requires deep study to avoid future complications better seek advice of Chartered Accountant also.

Kishan Dutt Kalaskar
Advocate, Bangalore
6050 Answers
381 Consultations

4.8 on 5.0

All these KYC documents are enough and payment through NRO account may be repatriated freely.

Vimlesh Prasad Mishra
Advocate, Lucknow
6848 Answers
23 Consultations

4.9 on 5.0

You don’t need any other NOC

Ajay Sethi
Advocate, Mumbai
87894 Answers
6207 Consultations

5.0 on 5.0

1.you have to deduct TDS @20.6 from total sale value and deposited with the government with NRI pan no. For all amount the tds is applicable in case of NRI even below 50 lakh. So you deduct tds deposit it with goverment remaining amount has to be paid to NRI.

Sine here it is long term capital gain property is held by NRI for more than 3 years the nri is liable to pay capital gain tax at rate of 22.6 @.

2. No rbi permission is requiere on sale.

3. Yes you can credit in NRO account balance amount deducting tds and depositing same with department

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

Under FEMA after deduction of applicable tax the NRI can remit amount hoti 1 million dollar. So noc will be required.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

No noc is required.

For TDS you have to take a registration from department for TAN no. For deduction of tds from nri. The buyer is required to have a TAN no. For seller it is not required.

Further the seller can also approach jurisdictional income tax office for the exemption certificate on TDs under this if he get TDs only his taxable amount of capital gain will be deducted so he will get benifit.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

On selling a property by an OCI, taxes have to be paid if they are

selling this property. On sale of the property, the profit on sale shall be subject to capital gains.

Non-Residents (NRI) on the other hand do not reside in India, many of them hold foreign citizenship. Once they sell their property in India and capital gains occur, it is not easy for the Indian Tax Department to ensure compliance for those settled abroad. To ensure compliance of Indian tax laws, as per rules TDS is deducted by the buyer when property is sold in India. If the buyer of NRI property fails to deduct TDS then they may become liable for taxes due on the property they purchased. TDS u/s 195 is deducted to ensure capital gain tax compliance.

TDS is to be deducted at the rate of 20% plus Education Cess and Secondary and Higher Education Cess which works out to the rate of 20.6% on gross transaction value if sale price is less than 1 Crore. •In case the sale price is above Rs.1 Crore at the rate of TDS works out to 22.66% including Surcharge, Education Cess and Secondary and Higher Education Cess.

n case holding period is less than 3 years then Short Term Capital Gain Tax will be applicable. For short term capital gain, TDS applicable is be 33.99%.

After deducting the taxes as applicable you can pay the balance of sale consideration to the seller as per his instructions.

T Kalaiselvan
Advocate, Vellore
78048 Answers
1543 Consultations

5.0 on 5.0

any FEMA conditions apply ?

TDS as applicable.

T Kalaiselvan
Advocate, Vellore
78048 Answers
1543 Consultations

5.0 on 5.0

Is there any other NOC to be obtained by the seller (OCI status holder with PAN, Aadhar, NRO account and clear ownership title docs)

No NOC is required, obtain a legal opinion before purchase

T Kalaiselvan
Advocate, Vellore
78048 Answers
1543 Consultations

5.0 on 5.0

1. Since its a long term capital asset, ie it has been held by the seller for more than 3 years, you need to deduct 20.66% from sale proceeds

2.no permission is needed

3. yes you can (just check that you deposit in the NRO account of the seller only and not in the account of his relatives)

4. no FEMA conditions apply

5. no NOC to be obtained by seller

Yusuf Rampurawala
Advocate, Mumbai
6876 Answers
79 Consultations

5.0 on 5.0

The mere acquisition of property does not attract income tax. However, any income accruing from

the ownership of it, in the form of rent (if it is let out)/annual value of the house (if is not let out and it is not the only residential property owned by that person in India) and/or capital gains (short term or long term) arising on the sale of this house or part thereof is taxable in the hands of the owner. The amount paid should be subject to deduction of TDS.

Prashant Nayak
Advocate, Mumbai
27224 Answers
88 Consultations

4.4 on 5.0

With so many replies, the queries seem to be resolved.

Ganesh Singh
Advocate, New Delhi
6646 Answers
16 Consultations

4.5 on 5.0

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