Only if you become resident then above rate will be applicable otherwise nri rate will be applicable
TDS on sale of NRI property
I am selling a residential property in Delhi. It's a parental property ( purchased in 1959) that is rebuilt consisting of 4 flats in 2020-21. I went to the USA in December 2019 i.e. 20 months back to my daughter and since then I am living there in the USA. I am NRI by status now. I am selling a flat in the above-said property through power of attorney given to my relative as I am out of the country. The buyer is deducting TDS at the rate of 22.88% on land value and 34.32% on construction value as per NRI sale of property laws. The sale deed will be registered by next week. Is it possible to get the TDS deducted at a 1% resident rate? I will be back in India in January 2022. I am saying to the buyer that I can mail him that I will be back in January 2022 and will stay in India for the time to get back the residential status again. Can it be possible to deduct TDS from the buyer at the 1% rate if the sale deed is to be registered next week but I will be back in Jan 2022 on the basis of my mail to him or on the basis of any other document? If not possible what are the consequences of deducting tax at the lower rate?
Asked 2 years ago in Taxation
11 Answers
Since you are NRI as on date TDS would be deducted at 22 percent
it cannot be deducted at 1 percent now
3) You should file an application in Form 13 with the Income Tax Dept and request them to compute your Capital gains
4) The Income Tax Department will compute the Capital Gains of the seller and will issue a certificate for Nil/ Lower deduction of TDS depending on the capital gains arising on the sale of property.
5) You should to give this certificate to the buyer and the buyer will deduct the TDS as per the rates mentioned in the income tax certificate.
6) In case this certificate is not obtained by the seller from the Income Tax Department, 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.
The buyer is duty bound to deduct TDS at the applicable rate. You may have to file your IT return and get the refund, if eligible. For further assistance, it is better to consult a chartered accountant specializing in tax laws, as it is strictly not a legal issue as yet.
- As per law, an NRI/OCI , who is selling house property which is situated in India have to pay tax on the Capital Gains , and this tax that is payable on the gains depends on whether it’s a short term or a long term capital gains.
- Further, long term capital gains are taxed at 20% and short term gains shall be taxed at the applicable income tax slab rates for the NRI based on the total income which is taxable in India for the NRI.
- Further, when an NRI sells property, then the buyer is liable to deduct TDS @ 20%.
- However, an NRIs is allowed to claim exemptions under section 54 and Section 54EC on long term capital gains from sale of house property in India.
If your status is is NRI as on the date of execution of the registered sale deed, then the applicable taxes i.e., the TDS for NRI would be applicable.
In such a case where you are returning to India, you may better postpone the sale of property till your arrival back to India.
To reduce the TDS on Sale of Property by NRI, the NRI is required to file an application in Form 13 with the Income Tax Department for issuance of Certificate for Nil/ Lower Deduction of TDS.
After checking the documents, the tax department will issue a lower TDS certificate and will give the exact percentage of TDS that needs to be deducted by the buyer,"
Dear client,
The TDS rate can be lowered but with the permission of the Income Tax department. To lower TDS you need to do the following steps:
1. you should try to get certificate from Income tax department for calculation of capital gain which will reduce TDS
2. Submit all the documents related to property like purchase price, any renovation or construction done to the property, Date of purchase etc along with form 13. If the department is satisfied they can reduce TDS.
Thank You.
As per section 6 of the Income-tax Act, an individual is said to be a non-resident in India if he is not a resident in India and an individual is deemed to be resident in India in any previous year if he satisfies any of the following conditions: 1. If he is in India for a period of 182 days or more during the previous year; or 2. If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year. If I fulfill condition No. 2 by way of coming back to India in December this year and stays there for more than 60 days (as I was more than 365 days in India in the last 4 years). I will become a resident Indian in this financial year 2021-22. I wanted to give in writing to the buyer that I will come to India in December 2021 and will attain the resident Indian status in March 2022. Can he deduct TDS @1% now in October on the basis of my letter if the sale deed is to be registered next week?
Asked 2 years ago
You can postpone the sale of property until you become eligible to acquire resident status.
Without confirming your residential status, the buyer cannot accede to your request to deduct only1% now towards tax from the sale consideration amount.
The buyer can be prosecuted for not deducting appropriate and applicable tax at the time of payment of sale consideration amount.
Better option for you is to execute sale deed in March 2022
seller will not deduct TDS at 1 per cent merely on basis of your letter
Generally, the buyers play it safe and are advised by their tax consultants to be so in such matters. Notwithstanding your written statement about your acquiring the resident status later, there is an element of risk involved and so the buyer would be reluctant to oblige you.
Dear client,
if you want TDS deduction then you have to first become resident of India till march 2022 and then if you sell your property after becoming resident the TDS will be deducted at 1% but you need to sell your property after March 2022 when you receive resident status.
Thank You.
Yes the same applies to you if in a year you have stayed in India for above period then you can claim the same