I am planning to buy a residential property from a NRI. Kindly advise if NRI seller needs to provides me tds certificate from AO before I make the first payment (token money ) to him. After this, do I need to deduct tds from from token money(10 %) also and then again while making the remaining payment. Can I deduct whole tds in one go while making 90% payment during transfer of property instead of deducting twice which will require me to deposit tds to income tax twice. Also can nri seller get tds certificate in advance before getting into an agreement with buyer ?
Hi
The NRI can obtain a NIL deduction certificate from his AO in advance.
However, if certificate is not obtained, TDS @ 20% (if long term) shall have to be deducted on each payment made. Whole TDS cannot be deducted at once.
Also, you will require a TAN for such TDS deduction.
Hi,
In the absence of low/no TDS certificate from AO, TDS will have to be deducted @20% on each payment including token money payment.
Generally, AO will ask agreement to sell for giving TDS certificate.
If NRI sellers obtains certificate from AO for no deduction then there is no need to deduct TDS otherwise you need to deduct TDS @20..08%. NRI seller needs to obtain certificate before payment by you.
Rate of 10% is applicable for resident seller.
In this transaction , the requirement of deduction of TDS comes under section 195 . The NRI can get the certificte of the rate to be applied for the TDS and you can pay after deducting TDS . The process is that NRI applies to the department along with the Agreement to sale ( value declared therein ) . Then based on the value of the sales price the department determines the rate of TDS . the buyer makes the payment after deduction of TDS . Hence the TDS must be deducted at the time of payment only . Hence if you are making the making the payment in two -three trenches , you can deduct the TDS with each payment . Unless there is an agreement to sales is there , the department will not able to determine the sale consideration and therefore the tax liability .
Hi,
First of all, you need to deduct tax under section 195 in this case. You can apply same provisions of 1% on each payment made.
TDS has to be from on each payment saperately.
Best regards,
Damini
Hi,
The seller can arrange for the lower tds certificate from his AO by providing him the agreement for sale.
In the absence of the same, you will need to deduct TDS @20% from each payment including the token money that you make to him.
Hope that helps.
Regards,
Nikhil.
Sec 195 provision will apply in these case.
If NRI takes nil deduction certificate from AO then no need to deduct tds .
You have to deduct TDS on each payment,can not deduct in single transaction.
Sales Agreement is required to get certificate from AO.
