Tds applicable on n.r.i. selling property in india
SUKHVIR HOUSING AGENCY
(Querist) 27 November 2011
This query is : Resolved
Hi Tax Experts,
My NRI PURCHASED FLAT IN 2008 IN MUMBAI
1) If he need to Sell the flat will there be any Tax on the Capital Gains. If yes then how much %., because i heard U/S section 195 TDS of 20% is applicable on consideration paid to the seller (In case seller is NRI). The buyer has to deduct TDS from Consideration Value payable to Seller, He will not get any immunity from Income Tax liability
2) Can Seller avoid the Capital Gains by purchasing another flat?
3) What documents required to avoid TDS on selling property.
4) Is is mandatory for Buyer to deduct TDS from Consideration Value
Tax Experts your advice is higly solicited.
Thanks in Advance
Raj Kumar Makkad
(Expert) 27 November 2011
1. percentage of tax liability shall depends upon the year of purchase, amount of purchase with its registration charges and registration of sale-deed and sale proceeds.
2. Yes.
3. If the seller undertakes to purchase the subsequent residential property within a period of 3 years of such sale then he can avoid such liability.
4. No. Buyer has nothing to do with the TDS.
A V Vishal
(Expert) 27 November 2011
Long-term and short-term capital gains are taxable in the hands of non-residents. Exemption for long term capital gains: The long term capital gains arising on sale of a residential house can be invested in buying/constructing another residential house, within the prescribed time. The exemption is restricted to the amount of capital gains or amount invested in new residential house, whichever is lower. If the amount of capital gains is invested in bonds of National Highways Authority of India (NHAI) or Rural Electrification Corporation, then the entire capital gains is exempted, else the proportionate gain is exempted. As per the financial budget 2007-08, a cap of Rs. 50 lakhs has been imposed on investment that can be made in capital tax saving bonds. If you are an NRI/OCI/PIO, you would have to file your income tax returns if you fulfill either of these conditions:
(a) Your taxable income in India during the year was above the basic exemption limit of ` 1.6 lakh OR
(b) You have earned short-term or long-term capital gains from sale of any investments or assets, even if the gains are less than the basic exemption limit.
Note: The enhanced exemption limit for senior citizens and women is applicable only to residents and not to non-residents. There are two exceptions:
(a) If your taxable income consisted only of investment income (interest) and/or capital gains income and if tax has been deducted at source from such income, you do not have to file your tax returns and (b) If you earned long term capital gains from the sale of equity shares or equity mutual funds, you do not have to pay any tax and therefore you do not have to include that in your tax return. However, you may also file a tax return if you have to claim a refund. This may happen where the tax deducted at source is more than the actual tax liability. Suppose your taxable income for the year was below ` 1.6 lakh but the bank deducted tax at source on your interest amount, you
can claim a refund by filing your tax return.
Another instance is when you have a capital loss that can be set-off against capital gains. Tax may have been deducted at source on the capital gains, but you can set-off (or carry forward)capital loss against the gain and lower your actual tax liability. In such cases, you would need
to file a tax return.
Raj Kumar Makkad
(Expert) 28 November 2011
I think by clarification from the side of Vishal, no doubt remains now.
Guest
(Expert) 28 November 2011
1) Income or capital gain accruing in India is taxable in India. You can however claim exemption in country you reside presently by showing your income and proof of tax paid in India as double taxation is avoided by any country.
2) You can avoid capital gains tax by purchase of another property in India (not in any foreign country).
3) TDS is not made out of capital gain. You will have to deposit due tax in time separrately through any of the authorised banks and file a return to the IT department about that.
4) Buyer of property cannot deduct TDS on consideration value.
