Capital gain on sale of immovable property by non residents( four co-owners).

Dear Sir,

Hope you are doing well !!

As per the Indian Income Tax Act, when a resident purchases any property from a non resident, he has to deduct income tax (TDS) and pay the balance amount to the seller.

-Buyer/You have to deduct 20% (plus applicable surcharge & cess) of the sale consideration as tds before making the net payment to seller.

Buyer should first obtain TAN under section 203A of the Income Tax Act, 1961 before deducting TDS. TAN can be obtained by applying buy filling up the Form 49B.

TDS must be deducted at the time of making the payment to the NRI. The information about the TDS being deducted and the rate at which it was deducted should be mentioned in the sale deed between the NRI seller and the buyer.

The TDS deducted by the buyer should be deposited through Form number or challan for TDS payment on or before the 7th of next month in which the TDS is deducted.

The TDS can be deposited through banks that are authorised by government of India or the Income Tax Department to collect Direct Taxes. The deposit has to be made by the buyer.

-Yes it is necessary to obtain PAN of all sellers.

-Lower & Nil certificates are required from non resident in order to claim tds exemption.

If you need any further assistance, you can call me.

They need to calculate if any capital gain tax liability arise in their name because of this transaction if yes TDS will be deducted and if the non resident doesnt provide the details TDS shall be deducted at 30%. If you think TDS should be deducted at low rate you need to consult your Assessing officer and get a certificate from him u/s 197 mentioning your TDS rate and then that needs to be provided to the buyer. Even if the TDS is deducted at higher rate that non resident can file return of income and claim refund.

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Thank you.

Dear Sir

In case of Seller is NRI ,then TDS is to be deducted @20.08%(Inclusive of Health & Edeucation cess) of Sale consideration.

Yes, all Non-Resident required to be a PAN Holder.You may get TDS Exemption if AO provide you certificate u/s 197.

Regards

Shiv Kumar Agarwal

Hi

The buyer shall deduct TDS for each of the co-owners under section 195 at the time of payment. The rate of TDS shall be 20% plus cess plus surcharge if the capital gains are long term.

Yes, PAN would be required. The NRI me apply for a No deduction /low deduction certificate if there's no tax liability.

Hi,

- TDS @20.8% on the sale consideration would be deducted by the buyer on the PAN of all the sellers. Sellers are required to obtain PAN otherwise higher rate will be applicable.

- Non residents can apply for lower TDS deduction certificate.

Thanks

Where the non-resident is selling a property after holding for more than 2 years, it is taxable at 20%+surcharge+ cess.  The buyer has to deduct taxes at 20% +surcharge + cess, as applicable. IN case of short term capital gains, taxes should be deducted @ slab rates.  Where the non-resident wants to reduce the tax deduction, he can take a withholding tax order and then buyer can deduct taxes accordingly.  In the absence of PAN, TDS is 20% or maximum marginal rate. HEnce, necessary to obtain PAN since, the sale also has to be reported in the tax return filing by July 31 post the year end. 

Based on the application, the tax officer can  ask for various details like cost of house property, sale value, its supporting documents to compute capital gains and determine TDS rate. 

Hello,

TDS would be deducted @ 20.8% on the sale consideration.

In case PAN is not obtained, a higher deduction would be made.

For exemption, non-residents need to make an application(Form 13) for a certificate under Sec. 197.

I hope this answer satisfies your requirement.

Regards,

CA Hunny Badlani