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Regarding tds for buying property nri

Rajiv Gupta (manager) (61 Points)

12 October 2016

Hi. I am going to buy a Flat from NRI. Actually the seller is India and deputed in Denmark in ministry of External Affairs. I have following queries: a) For NRI, I need to deduct tax on the registry amount. What is the slab for tax deduction in this case along with surcharge, cess etc. b) Should I deduct tax before registry and submit the same with IT department or after registry. What is the time frame when I need to deduct and submit the TDS. c) What is the process for submitting the tax once same has been deducted. d) I read, TAN is required in this case. Me and my wife will be co-owners. Do we need TAN for both of us as she is non working. Note: Seller is having his PAN number. Please provide the requested information. Regards, Rajiv

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14 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160322 Points)
Replied 12 October 2016

1 TDS @ 20.6% along with cess( assuming long term gain) is to be deducted on capital gains, before registration.

2. Both of you will be required to obtain TAN no.

3. Seller can obtain 'No TDS deduction certificate' from his ITO, if he is going for exemption over the capital gain, in that case you need not go for any such procedure.

Rajiv Gupta (manager) (61 Points)
Replied 12 October 2016

Thanks.

As per income tax rules, TDS deducted is to be submitted by 7th of next month when payment is made. So in case I am making payment and registry on 3rd Nov'16, it has to be deposited by 7th Dec'16. Rite?

Also, won't it work in case I have TAN number as the co-applicant is housewife and no income.

20.6 will be like 20% Tax, 2% Cess (on TDS) and 1% SHEC (on TDS). Rite?

Thanks.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160322 Points)
Replied 12 October 2016

1. 'So in case I am making payment and registry on 3rd Nov'16, it has to be deposited by 7th Dec'16. Rite?'

Yes, right ,provided you are deducting TDS on 3rd Nov.

2. Why unnecessarily invite query from department, better obtain PAN of your wife. OR to satisfy department, make demarcated clause in the agreement that your share in the property is 100%, and your wife's name is added just for convinience.

3. Yes, its total of TDS + cess.

Rajiv Gupta (manager) (61 Points)
Replied 12 October 2016

Thanks.

My wife is having PAN number. I had a word with Income tax customer care about TAN. They said any one of the co-owner can apply for TAN. Since I am taking Home loan as primary applicant and wife as second applicant only. So, should I apply for TAN for wife also.

One more pont, I have paid Rs 1Lakh as token amount to the seller in June'16 and rest of payment will be done in Nov'16. Since I have not dedcuted any TDS yet, will it be considered as delay in submitting TDS as partial amount (1L only) has already been paid?

Thanks.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160322 Points)
Replied 12 October 2016

'I have paid Rs 1Lakh as token amount to the seller in June'16 and rest of payment will be done in Nov'16. Since I have not dedcuted any TDS yet, will it be considered as delay in submitting TDS as partial amount (1L only) has already been paid?'

Yes, interest over the TDS will be required to be paid till date of payment.

Rest, be prepared to explain ITO as per call of the customer care.

Rajiv Gupta (manager) (61 Points)
Replied 12 October 2016

ok.

I will pay the necessary penalty.

also, suggest which form/challan to be filled for submitting the tds deducted (for NRI seller).

Also, as I paid Rs 1Lakh, so TDS ( @ 20.6%) along with penalty have to be submitted, Rite?

Thanks

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160322 Points)
Replied 12 October 2016

After you obtain TAN, challan no ITNS 281.

Under Nature of Payment:: 195 - Other sums payable to a non-resident.

Rajiv Gupta (manager) (61 Points)
Replied 12 October 2016

Thanks..

I have applied for wife's TAN too.

Pls suggest on below points:

a) Since my wife is non working, all TDS will be paid from my account. Is there any issue in doing so. She is co-borrower (home loan) and will be co-owner.

b) I paid 1 Lakh as token amount. and have not submitted the same. If I pay the same now (with penalty), will I need to submit two separate challans (for both TANs), In that case only my bank account will be used for both the challans. Is it fine to do so.

Thanks.

Regards,Rajiv

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160322 Points)
Replied 12 October 2016

a) No issue at all. After all, all the payments will be from your account, I suppose.

2) All the (TDS) payments, earlier due and future ones should be done with both the tan no. challans, (to be divided as per share in the property). For earlier one only interest is to be added, no penalty at present.

Rajiv Gupta (manager) (61 Points)
Replied 12 October 2016

yes, it will be from my account.

Can you pls confirm the interest percentage and formula considering 6 months delay.

Rajiv Gupta (manager) (61 Points)
Replied 12 October 2016

Thanks a lot for all information..Can you pls tell the interest rate/formula for computing tds assuming 1L as money given and 6 months delay in deduction of TDS.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160322 Points)
Replied 12 October 2016

One way you can save yourselves from all the interest and penalty. Even it will be beneficial to NRI seller also.

Ask him to get certificate from his ITO, for calculation of capital gains on sell of the property. Once that is obtained, you need not deduct TDS on total amount, but only over the capital gains.

In that case seller will be benefited by lesser amount of TDS deduction, and you can pay that amount only at the time of registration. In that case your 1 lakh amount will be treated as advance, no TDS liability over advance amount!

Rajiv Gupta (manager) (61 Points)
Replied 12 October 2016

Great. I will disucss this with Seller.

Rajiv Gupta (manager) (61 Points)
Replied 14 October 2016

Hi,

As discussed with seller, he will transfer back the token amont given to him and we will make fresh payment of complete amount in Nov after deducting the TDS.

Have applied for TAN for both co-owners.

- So, TDS has to be deducted from my and wife's account in equal proportions? Should I transfer amount in her account to pay half tds from her account? Do we need to fill separate challans?

Pls sugget.