TDS on Sale of House Property by NRI to Resident

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This discussion clarifies the Tax Deducted at Source (TDS) implications when a resident in India purchases a house property from a Non-Resident Indian (NRI). The key question revolves around the correct TDS rate, with advice pointing towards 22.88% under Section 195 for long-term gains and potentially higher for short-term gains, rather than the standard 1% or 20% applicable to resident-to-resident sales. It also touches upon the buyer's obligation to obtain a Tax Deduction and Collection Account Number (TAN) and the process of using Form 26QB for remittance, noting that TAN isn't always required for the NRI seller but is crucial for the buyer's TDS deduction.

swasti

swasti (Querist)
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15 February 2020 An NRI having a house property in India wishes to sell it to a Resident. The sale price exceeds Rs 50 Lakhs. What TDS has to be deducted by the resident - 1% or 20%? Kindly advise.
The NRI is having PAN in India.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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15 February 2020 22.88% TDS under section 195 has to be deducted.

swasti

swasti (Querist)
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15 February 2020 Thanks a lot Sir for the expert advise. That means the purchaser has to apply for TAN. Is it?

Gokul Sharma

Gokul Sharma (Expert)
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15 February 2020 TDS on immovable property has to be paid using Form 26QB within 30 days from the end of the month in which TDS was deducted
no tan no required.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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15 February 2020 TAN is necessary to deduct TDS

26QB not applicable to NRI seller.

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CA Mukesh Jain S

CA Mukesh Jain S (Expert)
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15 February 2020 TDS will be deducted @ 22.88% u/s 195 on full consideration if the gain is long term. If gain is short term then it is @ 34.32% ie., Tax+ Scharge+ cess. The NRI can apply for lower deduction with AO in form 13 stating that TDS needs to be done only on gain part rather than full value of consideration.

swasti

swasti (Querist)
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16 February 2020 Thanks a lot for the expert suggestions.

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