J. D. Shah Associates
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For NRIs selling immovable property in India, navigating tax-related complexities, especially regarding Tax Deducted at Source (TDS), can be challenging. Applying for a Lower or NIL TDS Certificate provides an efficient solution to prevent excess tax deductions. The article offers a step-by-step g
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FAQ :
A Lower or NIL TDS Certificate, issued by the Indian Income Tax Department, allows NRIs selling property in India to pay a reduced TDS rate or avoid it altogether, preventing excess tax deductions.
For NRIs, TDS on property sales is a flat 20% plus surcharges and cess on the entire sale value, not just the capital gain. This can lead to excessive deductions, especially with minimal gains or losses. A Lower TDS Certificate ensures the deduction matches your actual tax liability.
It prevents overpayment of tax, avoids the lengthy process of claiming refunds, and frees up cash flow during property transactions, especially when capital gains are minimal or there's a capital loss.
It is most useful when there is minimal or no capital gain on the property sale, when there's a capital loss from the transaction, or when you need to ensure proper tax computation and reduce excessive deductions.
Key documents include PAN Card, property purchase deed, details of payments and fund sources, capital gain computation, proof of non-resident status, past Income Tax Returns (three years), and the buyer's TAN.
The application for a Lower or NIL TDS Certificate must be submitted under Section 197 of the Income-tax Act, typically using Form 13.
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