Buying a flat from someone who has German citizenship(OCI Card Holder in India) I am buying a flat from a married couple who has German Citizenship but has Indian PAN card, AADHAR, Indian Bank account and Voter ID card. They have joint ownership of the said flat. They now have been living in India since 1.5 years(according to them). Husband has filled ITR for last FY(2021-2022) and wife has been filing ITR for last 5+ years straight without fail, even while back when they were in Germany as they had earning rental income from the same flat property in India into their Indian bank account. Husband has a job in India for last 1.5 years. They are saying that in this deal, the TDS should be paid 1% only of the total agreed deal price, as they are in India for more than 182 days and hence do not come under NRI category rather a resident. I want to make sure IT dept should not come after me asking to pay another balance % TDS, which may be under paid after the deal is closed. Or claim the said flat itself? Hence, I need to close this deal appropriately by paying all the due taxes(TDS) correctly by laws and rules. Three questions: What will be the TDS in this sale deed to be paid to IT dept, 1% or 20.99% or 33% or 23%? What and How should I ensure that they are not hiding anything - or even if they are, it should not affect me after the deal is closed from a % TDS paid standpoint? Should I involve a Tax Lawyer and/or CA to get an affidavit or declaration made that I should ask the sellers to sign which can be used as a proof later if IT Dept questions me? Please help with some pointers to safeguard in this deal. P.S. I will also be approaching a nationalized bank for a maximum possible home loan
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The flat belongs to the owners who are German nationals but they would be considered as residents of India for tax purposes as their stay is more than 182 days. This is correct.
Now TDS has to be paid and hence contact a CA for this as tax issues are best resolved by the CA as they have deep knowledge of taxation structure.
Take a written opinion from CA regarding TDS to be deducted
2) sale deed should contain an indemnity clause to indemnify you in case any third party claims are made
3)
The TDS rates applicable on the sale of an NRI-owned property are as follows:
• LTCG tax on the sale of property held for more than two years: 20%
• STCG tax on the sale of property held for less than two years: According to the subjected Income Tax slab rates for NRIs.
In addition, surcharges and cess are also applicable to capital gains.
4)
The NRI seller can avail of the facility of Tax deduction at lower rates to the Income Tax Jurisdictional Assessing Officer. The application can be made by the resident buyer of the property (under Section 195(2) of the Income Tax Act) to determine the portion of income liable for a tax deduction.
The NRI seller can also apply in Form 13 to obtain a lower/ Nil TDS (under Section 197) for such receipts.
If the property has been held by the owners for over 2 years then the TDS in respect of sale of immovable property by sellers holding foreign citizenship is 20%+cess+Surcharge.
The TDS is required to be deducted whenever any payment is made to the NRI for purchase of property.
Even if the advance is being paid for purchase of property, TDS is required to be deducted.
Even if the value of property is less than Rs. 50 lakhs, this TDS is required to be deducted.
If the TDS is wrongly deducted or not deducted then the income tax department will not do anything to the seller but will catch hold of the buyer of the property to deposit the TDS. If the buyer forgot to deposit or deposit less amount towards TDS then the income tax department would recover the TDS from the buyer.
Even if the seller has Indian pan card or AADHAR card, he can still be considered a NRI. The residential status is determined only on the basis of number of days spent in India.
If the seller gets a certificate from the income tax department for computation of capital gains, the TDS may be deducted at a lower rate
23 percent will be deducted in the same as TDS
Thanks much Adv. T Kalaiselvan and Adv. Ajay Sethi - I am confused with the NRI status of the seller in the context - Since they have been living in B'lore since April of 2021 on OCI card, will they still be considered as NRI(20% TDS on resale) or Resident(1% TDS)?
The amount deducted relied on the residential status of the seller. If the seller is a resident Indian then the amount of the TDS to get deducted will be 1% of the sale price and when the seller is an NRI then the TDS deducted relies on the quantum of the money obtained by the seller.
Essential points to follow during finding out whether the seller is a resident or NRI
You may ask the seller to
If the TDS is wrongly deducted or not deducted then the income tax department will not do anything to the seller but will catch hold of the buyer of the property to deposit the TDS. If the buyer forgot to deposit or deposit less amount towards TDS then the income tax department would recover the TDS from the buyer.
Dear client, Foreign nationals of non-Indian origin resident outside India can acquire/ transfer immovable property in India, on lease not exceeding five years and can acquire immovable property in India by way of inheritance from a resident. Since he is a German citizen he can sell a property for certain period of time.
It will be NRI till you are not another country citizen as india doesn't recognize dual citizenship