I’m an nri and selling a property in India The tax as per new rules is 12.5% but the buyer is insisting on paying a tds of 20% Can someone send me a link to the bulletin where tds is at the new rate if it’s changed
yes, you are right. The TDS rate for long term capital gain for NRI seller is 12.5%. Please note that the effective rate of TDS will be 14.95% which incudes 15% surcharge and 4% education crss.
You may refer to First schedule of Finance Act (no. 2) 2024 PART II RATES FOR DEDUCTION OF TAX AT SOURCE IN CERTAIN CASES for clarification.
Thank you. The property is held jointly with my wife Can the tds be paid into the income tax account of the main seller or it should be paid to both. If it’s paid in just my account will my wife incur an interest on unpaid advance tax ?
- If the property is sold on or after 23.07.2024, TDS rate is 12.5%. Rate of surcharge depends on the amount of sale consideration
- TDS would be deducted on the amount of the sale consideration
- Buyer has to apply for TAN and file TDS return
- You can apply for lower TDS deduction certificate
- For remittance of sale consideration outside India, bank would need Form 15CB,15CA and A2
- File ITR next year (i.e. A.Y. 2025-26)
- If the wife has also contributed for the purchase of the property then TDS would be deducted in the ratio of investment made by husband and wife
- If there is no contribution made by wife then no question of tax payable by her on the gain of property to be sold
For detailed discussion you may opt for phone consultation
Non-resident Indians who do not hold a PAN card are required to pay TDS at a higher rate of 20%. There is no change in the law as such.
It is important to see who is the actual owner of property - like who has funded the property. Generally, wife is kept as a second name in the documents. In case, you have paid for the property entirely and will be showing the entire transaction in your income-tax return, then TDS can be deducted under your name. Else, it is necessary to show wife name as well.
The Finance Act (No. 2), 2024 has indeed reduced the TDS rate for NRIs selling property in India from 20% to 12.5% on long-term capital gains (LTCG), without indexation benefits. However, after adding the applicable surcharge (15%) and cess (4%), the effective TDS rate becomes 14.95%. This change applies to property sales on or after July 23, 2024
To ensure compliance with the new TDS rate:
Both sellers (you and your wife) should have TDS deducted in proportion to your ownership shares in the property. If TDS is only deducted on your share, your wife could incur interest on unpaid advance tax for her portion of the capital gains
For detailed, personalized advice, consider a phone consultancy.
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
It is advisable to receive the amount in both the co-owners and TDS should also be deposited in both the co-owners.
In case, the sale consideration & TDS are received in just your account & PAN, your wife will incure the interest for not depositing advance tax.
When a property in India is sold by a Non-Resident Indian (NRI) and is held jointly, the Tax Deducted at Source (TDS) must be applied to the payment proportionate to the ownership shares of each seller. Here are the key considerations for your scenario:
TDS Distribution: TDS should be deducted separately for each co-owner based on their respective share in the property. If you and your wife own the property jointly, the buyer should ideally split the TDS deduction accordingly and deposit it under each co-owner's PAN (Permanent Account Number).
Payment to Income Tax Account: The TDS deducted from the sale consideration must be deposited into the income tax accounts of both you and your wife, reflecting your respective shares. This is crucial because the income from the sale is taxable individually to each owner, aligning with their share of the property.
Interest on Unpaid Advance Tax: If the entire TDS is paid into only one seller’s account, it might lead to a mismatch in tax credits. For your wife, if TDS is not accounted for under her PAN, it might appear as unpaid taxes on her share. She could potentially incur interest charges for unpaid advance tax if her tax liability exceeds the advance tax (including TDS) paid by the end of the financial year.
It's important to ensure that the TDS is appropriately allocated and deposited to prevent any future tax discrepancies or penalties.
