NRI - Property sold and then another property purchased

If you are a non resident, tax at source would have been deducted u/s 195 by your buyer out of sale proceeds and this TDS would have been reflected in your 26AS, the statement in which your tax details and high value (AIR) transactions are recorded. As you did not file IT return, you would have not offered the capital gains, as a result of which you would have received the notice. It is possible that your actual tax liability would have been less than the TDS and you might have been entitled to refund also.

If the property was sold in the financial year 2013-14, you can now file belated return latest by this month end, after which you will not be able to file return voluntarily. You can compute your long term capital gains and file returns latest by this month end.

Once you file the return, you can then proceed to respond to the notice in the efiling portal itself. As you purchased property out of sale proceeds, you can mention that the property was purchased out of sale proceeds of an existing property.

Sir in the present case you need to file Return of income . You need to declare the capital gains liability and claim exemption for investment in another property.

You can select 2 options if available i.e. sale of immo property and purchase of immov property.

In case of of non residents, any person responsible for paying any taxable amount to a non-resident is required to deduct TDS. If he has not deducted the same, it is your responsibility to file Return of Income at the end of the year before the due date. You need to calculate the amount of capital gain taxes and offer it to tax after considering exemption under section 54.

However, considering the fact that you have re-invested entire amount in another residential property, your tax liability will be NIL. But you should file the belated return now. The last date of filing the belated return in your case is 31 March 2016. Before that you have to obtain PAN.

Please contact in case you require any help.

In my opinion you should select "Self-investment/expenditure is out of accumulated savings" as the you have bought new property out of your accumulated saving (i.e. existing property).

Do not need to worry its just a formal inquiry.

Dear Sir,

It appears that you have received a query/ inquiry because the person to whom you might have sold your property may have deducted TDS on it and as you have not filed your returns, you have received this notice.

First thing, which you should do now is to get your returns filed before 31st March 2016 as that is the Last day to file your returns for the FY 2013-14.

Secondly after filing your returns, Select Option 2 & Option 3 & preferably select Accumulated Savings as I assume you have bought the Pune Property out of the Sale proceeds of the Bhopal Property.

I would advise you to hire a professional to file your return as it is you have received an inquiry notice so you cannot afford committing a mistake while filing your returns.

Trust this clarifies your query.

Feel Free to get back/ call for further clarifications.

Thanking You.

Regards,

CA Rohit R Sharma

BCOM, ACA, LLB - GEN, CERT. FAFP.