Property Purchase from NRI - Tax based on LDC

Hi,

There is no way to get rid of this adjustment as this is a system driven processing. Since there is low/no chances of recovering this amount manually from the NRI seller and remitting the TDS, the only possible way could be to submit the requisite forms to the officer once the NRI files the return for AY 2024-25 after including this sale as a part of their income.

This way we can respond to the adjustment and you will not be termed as Assessee-in-default for the purpose of recovery of taxes.

Option 1

Try to contact the seller and apprehend him about the facts (i.e. deposit of Rs. 1.64 lac will reflect in Form 26AS of the seller and he will take credit at the time of filing of the ITR therefore no loss to the seller). Share copy of notice with him and try to recover the remaining TDS amount.

Option 2

Wait for the filing of ITR by the seller and submit copy of his ITR AY 2024-25 alongwith the proper response

For detailed discussion you may opt for phone consultation

In dealing with the notice from the Income Tax Department for additional TDS on the property purchased from an NRI, here's a structured approach:

1. Understanding TDS Obligations: It's crucial to understand that when purchasing property from an NRI, TDS needs to be deducted at specified rates based on the nature of the capital gain (long-term or short-term). Remember, these rates are further increased by surcharges and cess, leading to effective rates like 20.8%, 22.88%, or 23.92% depending on the income slab​​​​.

2. Addressing the Incorrect Deduction:

   • 
     Reach Out to the Seller: Attempt to contact the NRI seller to discuss the additional TDS requirement. Explain that this additional amount will reflect in their Form 26AS, which can be used to offset their tax liabilities.
   • 
     Wait for Seller's ITR Filing: If the seller is unreachable, you may have to wait until they file their Income Tax Return for the relevant assessment year. Afterward, submit a copy of this return to the Income Tax Department, accompanied by a thorough explanation of your situation.

3. Ensuring Compliance and Documentation: Keep all relevant documentation ready. This will support your case when dealing with the Income Tax Department.

4. Future Precautions: For future transactions, ensure comprehensive understanding and compliance with TDS provisions, including all components like surcharge and cess, to prevent similar issues.

Please let me know if you need any other clarification!

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

Thank you.

Shubham Goyal

I think you did not deduct surcharge and cess over and above the LDC rate.

Did you consult a CA while calculating it?

The demand must be regarding surcharge and cess on this amount.

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

Thank you.

Ideally, one needs to look at wording of LDC to determine if the rate is final rate or excluding surcharge and cess. It can be argued as final rate. In this situation, you can wait for NRI to file his return declaring his income and tax and ask him to share his copy of return in order to avoid consequences on you.