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Tds on purchase of immovable property from non resident ?

CA Abhishek Singh (practice) (2106 Points)

15 May 2014

Hello everyone,

one of my client has purchased a residential house property from a non resident indian. (resident of canada)for Rs.1.50 crores. since 194-IA is not applicable for deduction i am confused as to at what rate tax should be deducted and whether it is necessary to apply for TAN ?

waiting for the views of the experts.

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7 Replies

Income Tax Wala: (Fin. Expert) (Chartered Accountants) (2015 Points)
Replied 15 May 2014

No need to take TAN

Provisions for Non Resident Indian:- If payment is made to a Non-Resident then section 194-IA will not be applicable. Rather section 195 will be attracted and TDS is required to be deducted @ 20%+EC&SHEC on the sale consideration. Surcharge @ 10% will be applicable if amount paid exceeds Rs 1 crore. The limit of Rs 50,00,000/- is not applicable in case of payments made to NRI’s.

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Mihir (Wealth Manager) (5293 Points)
Replied 15 May 2014

Section 195 will apply instead of 194-IA

Pranav (owner) (226 Points)
Replied 15 May 2014

Yes true...section 195 will be attacted

Shilpa Bhauwala (Kotak Mahindra bank) (35 Points)
Replied 15 May 2014

But an individual is liable to deduct tax only if 44 AA B is applicable in last p.y.

Income Tax Wala: (Fin. Expert) (Chartered Accountants) (2015 Points)
Replied 15 May 2014

Dear Shilpa, here in this case nothing to do with section 44 AB. as provisons of 194 ia or 195 in lieu of 194 ia is applicable to all who enter into any transaction of sale and purchase of property exceeding specific limit as the case may be.