Determination of Residential status for sale of residential flat

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This discussion clarifies the residential status of an Indian citizen selling a property in India while employed abroad. The key question is whether TDS should be deducted at 1% under Section 194IA or a higher rate under Section 195, based on the individual's residency status at the time of sale. The consensus suggests that despite being employed overseas, if the individual meets the criteria for being a Resident in India for the relevant financial year, the lower TDS rate of 1% under Section 194IA should apply.

Deepak Patel

Deepak Patel (Querist)

26 April 2021 A person Indian Citizen having PAN. First time went out of India on 02/12/2020 on employment visa. He is selling his residential flat located in India on 05/05/2021 for Rs.1.25 cr which was purchased in 2015 for Rs.1.30 cr (LTCG is NIL) out of his taxable income earned in India and bank finance. Buyer want to deduct TDS u/s 195 @23.92% instead of 1% u/s sec 194IA. saying that a person is employed in foreign country on employment visa. Will he get nil deduction certificate u/s 195(3) or lower deduction u/s 197 .Question is that a person's status is R&OR or R&NOR or NR as on date of sales of residential flat . He has filed all his Income tax return till assessment year 2020-21 in India. Question to determine is that he is still R&OR (stay182 days or more in foreign country , previous 10 years in India, more than 729 days in India in preceding 7 Years, more than 365 days in India preceding four years in India F.Y 2017-18 to 2020-21). Which section to apply for tds 194IA or 195 ,Please comment.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

27 April 2021 As on the date of sale he is not a NRI. So deduct 1% TDS.

CA. Aditya Goel

CA. Aditya Goel (Expert)

27 April 2021 1. He is R in FY 2020-21 since he clearly stayed more than 180 days in India.
2. for FY 2021-22 - not possible to determine his residential status as of now.
3. Cannot be considered as NR just because he is employed outside India
4. basis all above points, he needs to be considered R as on date and hence 1% TDS to be deducted.
hope this helps

Deepak Patel

Deepak Patel (Querist)

27 April 2021 Sir, thank you very much

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