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Buying a Property? Hold Up! Let's Talk TDS on Seller's Residency

CA. Bhavik P. Chudasama , Last updated: 24 February 2024  

Congratulations on your decision to buy property in India! But wait, before you finalize the deal, understanding the Tax Deducted at Source (TDS) implications is crucial. Whether you're buying from a resident Indian or a non-resident Indian (NRI) seller, different TDS rules apply, and navigating them can be tricky.

This article is your one-stop guide to understanding TDS on property purchases, empowering you to make informed decisions and avoid potential tax headaches. We'll delve into

Aahil: So, Vivaan, everything's done! I finally bought my new apartment! But there's this TDS thing the seller mentioned. What's that all about?

Vivaan: Ah, TDS on property sales. It can get tricky, but don't worry, I'll explain it simply. Imagine TDS as a tax deducted at the source, like income tax from your salary. Here, the buyer (you) deducts a part of the sale price and pays it directly to the government.

Buying a Property  Hold Up  Let s Talk TDS on Seller s Residency

Aahil: Okay, but why? And how much do I deduct?

Vivaan: It depends! The main factor is the seller's residency status. If they're a resident Indian, you deduct 1% Straight on Entire Value, But if they're a non-resident Indian (NRI), you need to deduct 20% of the sale price (excluding certain exemptions) Education Cess and Surcharge applicable as the case may be.

Aahil: Oh, that makes sense. So, it's like ensuring NRIs pay their fair share of taxes?

Vivaan: Exactly! The deducted amount gets credited to the NRI's account, ensuring tax compliance.

Aahil: But wait, what if I forget to deduct TDS?

Vivaan: Not good, Aahil. You'll be personally liable for the deducted amount, plus interest and penalty. So, it's crucial to get it right.

Aahil: Okay, I don't want any trouble. How do I know if the seller is an NRI and what to do next?

Vivaan: The seller should provide you with a copy of their PAN card and consult with your tax advisor. Then, you need to file a TDS return online and make the payment within the due date.


Aahil: Sounds like a bit of paperwork. Is there any easy way to handle this?

Vivaan: Definitely! Consult a Good Chartered Accountant who will help you to calculate the amount, and even file the return for a fee. Saves you time and ensures everything's done correctly.

Aahil: That's a relief! Thanks for explaining, Vivaan. I feel much more prepared now.

Vivaan: No problem, Aahil. Remember, TDS is important, but don't stress. With the right information and tools, you can handle it smoothly. Now, let's celebrate your new apartment!


Key Takeaways

  • TDS applies to property sales, but the rate and applicability depend on the seller's and buyer's residential status.
  • Residents selling to residents with sale value below ₹50 Lakhs are exempt from TDS.
  • Residents selling to NRIs need to deduct TDS at varying rates depending on the capital gain type.
  • Seeking professional guidance from a tax advisor is crucial for ensuring compliance and maximizing potential benefits.

Disclaimer: This conversation is for informational purposes only and does not constitute legal or financial advice. Please consult a qualified tax professional for personalized guidance on your specific situation.

The author can also be reached at office.bhavikco@gmail.com

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CA. Bhavik P. Chudasama
Category Income Tax   Report

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