Tds on purchase of property from foreign national

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 October 2015 I want to purchase a property in Mumbai. The seller is a British citizen. However, the original agreement between the seller and builder reflects he is an Indian citizen. Also, he has a loan with IDBI bank which is still running.

He has a Indian PAN card
Ration card
NRO bank account

No taxes files in india for sometime of course.

Please advise if I go ahead with the sale what would be the TDS liability arising for me as a buyer. Is it fine to go with the deal considering him as Indian citizen and deduct 1% or I need to be aware of any other legal obligation.

Should I require any other document to ensure I am safe as a buyer with no tax implication arising for me from this deal.

In addition he has send me a TDS document which shows there is no TDS implication considering inflation index which seems correct based on the agreed property value.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

26 October 2015 Apply for determination of applicable TDS u/s 195(2) and deduct to be safe.

CA Pratik Shahnand

CA Pratik Shahnand (Expert)

27 October 2015 Since it is a NRO account so obviously you can not hide the fact that transaction is with non indian.

You will have to ask the seller to get the certificate from Income Tax determining the rate of tax to be deducted.

The certificate will be issued in the name of seller by IT guys, any general written document saying deduct 1 % wont be valid in your case.

If this is not followed up then on later stages the IT guys will ask for taxes from you since its clear that the seller is not paying taxes in India.

Its better if you take a professional help in this since its complicated.

Regards,
Pratik
pratik.shahnand@gmail.com

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