Aug 24, 2023
TDS (Tax Deducted at Source) is a mechanism implemented by the Indian government to collect taxes at the source of income. When it comes to the sale of property by an NRI (Non-Resident Indian), TDS is applicable under certain conditions. Here are the key points to consider regarding TDS on property sale by an NRI in India:
1. TDS Rates: The current TDS rate applicable for the sale of property by an NRI is 20% on the long-term capital gains. However, for short-term capital gains, the TDS rate is 30%.
2. Capital Gains: The NRI seller needs to determine whether the gain from the property sale is categorized as long-term or short-term capital gains. For immovable property held for more than 24 months, the gains are considered long-term. If held for 24 months or less, they are treated as short-term gains.
3. TDS Threshold: TDS is applicable only if the sale value of the property exceeds INR 50 lakh. If the property is sold for an amount below this threshold, TDS is not required to be deducted.
4. TAN and PAN: The buyer of the property (or the buyer's representative) is responsible for deducting the TDS and remitting it to the government. The buyer must obtain a Tax Deduction and Collection Account Number (TAN) and the seller's Permanent Account Number (PAN) for TDS compliance.
5. Form 15CA and 15CB: Before transferring funds out of India, the NRI seller needs to submit Form 15CA and obtain a certificate in Form 15CB from a chartered accountant. These forms declare details of the transaction, including tax computation, and are required by the bank for remittance purposes.
6. TDS Exemption: NRIs can avail exemptions from TDS by obtaining a certificate under Section 195(2) of the Income Tax Act from the Indian Assessing Officer if they believe their total income is below the taxable limit or if they are eligible for lower TDS rates due to provisions of Double Taxation Avoidance Agreement (DTAA).
We Jain Anurag & Associates, Chartered Accountants provide end-to-end services to NRI's clients including tax consultancy, lower deduction TDS advisory, Tax compliances, DTAA advisory compliances, and support services for foreign remittance so you can connect with our expert to avail that services.