• Bought a plot as NRI, seller PAN not registered and his handpicked CA filed TDS on my behalf

- I buyed a plot which costs 55 lakh INR and it had 4 sellers and 1 buyer(myself) .
- Buyers makes the hundred % payment and agreed mutually with sellers that TDS will be paid by sellers on behalf of buyer as (I have given the 20% down payment without deducting 1% percent ) and remaining 80% amount is taken care by Loan .
- Seller approached his known CA , who has took me into the call asked for OTP and made the payment on behalf of me and this was done right before the day of Registration .
- Next day registration was done and after 2 days I got a letter from Income tax to make 20% additional payment as one of the seller PAN and Adhar was not registered .
- When I approached sellers who has the issue with PAN card linking - he says that we will not be making any payment .

I would like to know if I have any open options legally as NRI who is residing outside India?
Asked 1 month ago in Criminal Law
Religion: Hindu

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7 Answers

If the seller links their PAN with Aadhaar by May 31, 2024, the buyer will not be responsible for deducting and paying the higher TDS mandated under Sections 206AA and 206CC of the Income Tax Act

 

2) seller can re-activate his  PAN card by first paying the penalty for non-linking PAN with an Aadhaar card and then applying to link PAN with Aadhaar card.

 


3) Issue legal notice to the seller that additional 20% payment has to be made as per the demand made by the income tax as the seller. Pan and Aadhaar is not registered

Ajay Sethi
Advocate, Mumbai
97716 Answers
7915 Consultations

It is the duty of the buyer to deduct tax at source out of the consideration amount to be paid to vendors.

Hence there's no surprise that you received a notice from income tax department to remit 20% of sale consideration in respect of the share of the NRI which is well within the law 

T Kalaiselvan
Advocate, Vellore
87918 Answers
2368 Consultations

If he has not made payment then you need to seek the refund. And If same is paid then you can ask him to compete the formalities of PAN Card and proceed. If not adhered by seller then you have to file suit seeking specify relief from him

Prashant Nayak
Advocate, Mumbai
33017 Answers
214 Consultations

  1. This is clear case of criminal breach of trust.
  2. You can file civil suit for recovery of 20% penalty from defaulting seller.
  3. Suit can be filed from abroad through GPA to friend/relative.
  4. You can also file criminal complaint under Section 316 of BNS. File complaint in the  Court of Magistrate  through GPA. Offence is cognizable and non-bailable with punishment  of imprisonment  un to five years.

Ravi Shinde
Advocate, Hyderabad
4523 Answers
42 Consultations

As an NRI buyer, you are responsible for deducting TDS (1% or 20% if PAN isn't linked with Aadhaar) when purchasing property. The seller's non-compliance with PAN/Aadhaar linking triggered the 20% TDS demand.

Steps to Take:

Respond to IT Notice: Explain the situation, provide proof of the agreement, and seek resolution.

Legal Notice: Issue a legal notice to the seller for reimbursement of additional TDS, citing breach of agreement.

Corrective Action: Consult a tax expert to rectify or revise TDS filings if errors occurred.

Court Option: File a civil suit for recovery if the seller refuses to pay, though this can be time-consuming.

Prevent this in future by verifying PAN/Aadhaar details, deducting TDS directly, and involving a lawyer for agreements.

For detailed, personalized advice, consider a phone consultancy. Hope you find the information helpful. You are free to contact me for further discussion. If you could spare two minutes of your time to write a review, it would be greatly appreciated and bring immense happiness to read it. Thank you. Shubham Goyal.

Shubham Goyal
Advocate, Delhi
667 Answers
3 Consultations

As an NRI residing outside India, you can explore the following legal options to address the issue of the additional 20% payment demanded by the Income Tax Department due to one of the sellers' PAN not being linked to Aadhaar:

  1. Legal Responsibility of TDS Payment:

    • Under the Income Tax Act, the buyer is obligated to deduct TDS at 1% of the total property value and deposit it with the government while purchasing immovable property exceeding ₹50 lakh. Even if you and the sellers had a mutual understanding for the sellers to handle the TDS payment, legally, the responsibility for non-compliance still rests with you.
    • However, since the agreement involved the sellers managing the TDS and one seller's PAN was not linked to Aadhaar, you can pursue remedies based on this breach of agreement.

  2. File a Civil Suit for Recovery:

    • You may file a civil suit against the seller whose PAN and Aadhaar were not linked. The basis of your claim would be that the seller's failure to ensure proper documentation resulted in the additional demand, causing you financial loss. Attach proof of the agreement, payment receipts, and communication regarding TDS responsibility.

  3. Issue a Legal Notice:

    • Before initiating legal proceedings, send a formal legal notice to the seller demanding reimbursement of the additional 20% payment. This step might prompt the seller to settle the matter without litigation.

  4. Seek Relief Under the Contract:

    • If the agreement with the sellers explicitly mentions their responsibility for TDS compliance, you can use this as evidence to hold them accountable for the lapse.

  5. Engage a Chartered Accountant or Tax Lawyer:

    • Consult a tax professional to explore the possibility of contesting the Income Tax Department's demand. They may help you file a rectification application or appeal, providing evidence that you acted in good faith and that the non-compliance was solely due to the seller's negligence.

  6. International Perspective:

    • As an NRI, you may face practical challenges pursuing legal action from abroad. Engage a lawyer in India to represent your case and coordinate proceedings on your behalf.

It is advisable to act promptly to avoid further complications or penalties. Engaging a competent legal and tax expert in India will streamline the process and help you protect your rights.

Thanks and Regards,
Advocate Aman Verma, Legal Corridor.

Aman Verma
Advocate, Delhi
318 Answers

- As per Section 194IA of Income Tax Act, A buyer has to deduct tax at the rate of 1% of the sale consideration, if the value of the transaction is Rs 50 lakhs or more.

- Further , this section covers residential property, commercial property, as well as land , and transactions pertaining to the purchase of agricultural land, are not covered under this provision.

- Hence, the buyer has to deduct TDS at 1% of the total sale consideration , and not seller. 

- Further, No TDS is required to be deducted if sale consideration is less than Rs 50 lakhs

- You can send a legal notice to the said seller for the non-payment of the TDS amount and further send the copy of the same to the IT department. 

Mohammed Shahzad
Advocate, Delhi
14839 Answers
225 Consultations

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