TDS rules when buying a property from an NRI seller

-
Under the India income-tax law, if the seller qualifies as a non-resident in India during the relevant financial year, the buyer is required to deduct TDS at specified rate (plus applicable surcharge and health and education cess) on taxable capital gain on sale of immovable property. The specified rate is 20% (plus applicable surcharge and health and education cess) in case of long-term capital gains (LTCG) and 30% (plus applicable surcharge and health and education cess) in case of short-term capital gains (STCG). 


Accordingly, you as a buyer is liable to deduct TDS and not the bank.

Any immovable property held for a period of more than 24 months is classified as a long-term capital asset (LTCA). In case of an LTCA, taxable capital gain will be net sale proceeds less indexed cost of acquisition (i.e. adjusted as per the Cost Inflation Index or CII) less indexed cost of improvement.

The seller is entitled to exemption in respect of LTCG tax under specified provisions of the India income-tax law, subject to fulfilment of attached conditions thereon.

Accordingly, it is important for the buyer to determine the taxable value of capital gains (LTCG or STCG) in the hands of the seller for TDS purposes, subject to any tax relief available under the applicable Double Taxation Avoidance Agreement. While computing the capital gains, the buyer also needs to evaluate whether the stamp duty value of the property exceeds 105% of the sale consideration. If so, there are additional tax implications for both the buyer and the seller. If the taxable amount of capital gain is nil, there will be no TDS implications.

There are penal consequences if there is a default in deposit of TDS. Thus, it is important that the residential status and the taxable amount of capital gain is calculated accurately. You may obtain an affidavit-cum-declaration for residential status and taxable capital gain from the seller. 

Regards,
CA Pankit A. Shah
Chartered Accountant

Office Address :- 
35, 4th Floor, Shree Krishna Center, 
Near Mithakhali Six road,
Navrangpura, Ahmedabad-380009.
Office Phone :- 079-4898 5464
Mobile No. :- 92272 30943
email id - capankitshah007@gmail.com





Comments

Post a Comment

Popular posts from this blog

Food Safety Compliance System (FoSCoS, URL - https://foscos.fssai.gov.in) wef 01st June 2020 in the States/UTs of Tamil Nadu, Gujarat, Odisha, Delhi, Manipur, Puducherry, Goa, Chandigarh and Ladakh.

-
Image
Food Safety Compliance System (FoSCoS) is an enhanced version of Food Licensing and Registration System (FLRS) which was launched in 2012 for issuance of pan-India FSSAI Licenses and Registration.      It had evolved incrementally and organically with changing regulatory needs. The technology on which it was built was outdated with technical support no longer available. Over years users complained of slow speed of FLRS and software experts resisted new changes on FLRS thus impeding any further improvement, expansion and innovation in the licensing system. Thus the migration from FLRS to FoSCoS was imperative. FoSCoS is built using latest technology with a vision to have modern on stop pan-India IT platform fo...
Read more

Processed milk samples fail to meet quality norm

-
Image
To check this, the regulator has directed the organised dairy sector to strictly complying with the quality norms and put in place 'testing and inspection' at entire value chain by January 1, 2020     Processed milk, including of major brands, have failed to meet the prescribed quality norm in 37.7 per cent of the total samples tested, according to an FSSAI study. In safety parameters too, 10.4 per cent of the processed milk samples were non-compliant, much higher than 4.8 per cent in raw milk. Adulteration was found in only 12 of the total samples surveyed with maximum reported in Telangana, followed by Madhya Pradesh and Kerala, the study said. The FSSAI study collected a total 6,432 milk samples from 1,103 towns and cities between May and October 2018 in all states and union territories. About 40.5 per cent of the total sample was processed milk, while the rest was raw milk. To check this, the regulator has directed the organised dairy sector to strictly start c...
Read more

Food Safety and Standards (Organic Foods) Regulations, 2017 is coming in to force from 1st April, 2019,

-
Image
  The FSSAI has issued a direction advising the enforcement official that these regulations may be considered as ‘ Enabling Regulations ’ and not to be considered for prosecution particularly for small original producers and producer organizations during initial phase of its implementation.  As per the FSS (Organic Foods) Regulations, any food offered for sale as ‘organic food’ should comply with the provisions laid down under either the National Programme for Organic Production (NPOP) administered by the Ministry of Commerce or the Participatory Guarantee System for India   (PGS-India) operated by the ministry of Agriculture and Farmers’ Welfare or any other system or standards that may be notified by the Food Authority from time to time.  Meanwhile, various representations have been received regarding challenges faced by organic food business operators including small original producers in light of the fact that a large number of producers and produc...
Read more