TDS applicable on buying from NRI (jointly owned property)

TDS applicable on buying from NRI (jointly owned property)

Agreement value of property is 86 lakhs. If its jointly owned by husband & wife, both NRI (share of % not mentioned in agreement). Owner has not provided lower tax deduction certificate. Owner has asked to transfer 43 lakhs in his account and remaining 43 lakhs in his wife's account.

I have read, if value of NRI property is more than 50 lakhs then TDS rate is 22.88% (including surcharge & cess) . But owner is saying since the property is jointly owned by husband and wife, share of each in property is less than 50 lakhs, TDS rate is 20.8 % (including surcharge & cess) .

Owner has asked to pay TDS to government in 2 parts. One each for 43 lakhs @ 20.8%.

Is it correct what owner is saying or TDS rate is 22.88 %?

Asked 5 years ago in Capital Gains Tax

Hello,

The threshold limit of Rs. 50 Lakhs is provided under Sec. 194-IA. Section 194-IA is not applicable when you’re buying a property from a non-resident. The TDS compliances have to be done as per Section 195 of the Income Tax Act which has no threshold limit. So TDS should be deducted for both NRI owners without any threshold limit.

The TDS rate would be 20% plus cess 4% i.e. total 20.8%.

If the income of the non-resident is between Rs. 50 Lakhs to Rs 1 Crore, surcharge at 10% would also be levied making total to 22.88%.

And if the income of the non-resident is more than Rs. 1 Crore, surcharge at 15% would be levied making total to 23.92%.

So you can decide the rate of TDS accordingly.

I hope that this answer satisfies your requirements.

Regards,

CA Hunny Badlani

Hunny Badlani

CA, Madhya Pradesh

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Hello Mr. Badlani,

Owners (Husband & Wife) have not given their income details. Will surcharge of 10% be levied, if I pay TDS to government in 2 parts for 43 lakhs each @ 20.8%, as requested by owner.

Asked 5 years ago

You should go ahead and deduct TDS at 20.8% u/s. 195. No surcharge to be levied.

Hunny Badlani

CA, Madhya Pradesh

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Dear Sir,

Hope you are doing well !!

No, surcharge will not levied.

TDS@20.8% would be applicable on the same.

Payal Chhajed

CA, Mumbai

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The 22.88% rate is incorrect and also 20.8% must be charged on capital gain if they have provided you lower deduction certificate from AO. TDS must be provided as per that certificate as it over rules the normal rules.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo

CA, Jaipur

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TDS rate shall be 20.8% on sales consideration.

Since he is a non resident Indian, section 195 shall apply and there would be no limit of 50 lacs applicable.

You will have to obtain TAN and file TDS return for this transaction.

Lakshita Bhandari

CA, Mumbai

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Surcharge shall not be applicable if you have only details of the capital gain income.

Lakshita Bhandari

CA, Mumbai

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Further, you need to obtain TAN for proceed further.

Payal Chhajed

CA, Mumbai

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Dear Sir,

Here are my replies to your queries:

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.

He has to deduct 20% of the sale consideration as tax before making the net payment to seller. As the property is jointly owned in that case TDS needs to be deducted from both the owners and deposited in the name of both the owners separately.

As you mentioned that sale consideration for both the owners is less than 50 lacs so surcharge will not be applicable and deducting TDS @20% is correct.

Thanks and Regards

Divya Chugh

CA, Noida

190 Answers

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