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OCI Income Tax liability

Raju (none) (50 Points)

18 May 2024

Hi,

My brother is a OCI and living abroad. He bought a land when he was an Indian citizen (4 to 5 years ago). Now he is thinking of disposing the land and considering the following options. Can you suggest and answer the below questions?

1) He gifts the land to me. I will sell it. I think there is no gift tax. Right? When I sell the land, how is the tax calculated?

2) He sells the land directly. How much is the tax percentage in this case? How is the indexation calculated?

Is it ok if the seller and buyer skip the TDS, and the seller pay the tax directly to the IT department?

Best Regards,

Raju

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5 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (162060 Points)
Replied 18 May 2024

The tax liability will be same in both the cases, except TDS deduction by Buyer. In first case there will be additional liability of stamp duty & registration charges.

TDS liability lies over buyer, seller can offload the liability in buyer's name.

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Raju (none) (50 Points)
Replied 18 May 2024

What is the long term capital gains tax % in both of these cases?

TDS deduction by buyer is only applicable for case 2. Right? Is the TDS on profit amount or sale amount? Should we get the TDS certificate from the buyer at the time of registration and then claim the return when filing the IT returns with the help of a CA?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (162060 Points)
Replied 18 May 2024

In both the cases it will be 20% + cess.

TDS in first case will be 1%, only if the value of the property be Rs. 50L or more.

TDS rate on NRI/OCI seller will be 20%+ surcharge, whatever be the property value.

Seller can apply for lower deduction of TDS with his jurisdictional ITO.

Yes, buyer will issue tax deduction certificate in form 16B.

Raju (none) (50 Points)
Replied 18 May 2024

Oh. Tax is (20% + cess) on the profit. But TDS is (20% + surcharge) on sale value. This sounds little strange.

What happens if the buyer doesn't take the responsibility of TDS and issue form 16B to the seller (OCI)? Should the seller file his income tax and pay (20% + cess) on the profit directly to the IT department?