TDS on sale of immovable property co-owned by a resident and a non-resident

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This discussion addresses the complexities of Tax Deducted at Source (TDS) when an immovable property co-owned by a resident and a Non-Resident Indian (NRI) is sold. It explores whether a buyer can deduct TDS at 1% under Section 194IA for the resident co-owner when the NRI has granted a power of attorney and will not repatriate funds. The applicability of TDS under Section 195 for the NRI, the necessity of filing Form 13 for nil TDS, and the implications of capital loss are also examined, highlighting the importance of obtaining a Nil Tax Deduction Certificate.

Vaishnavi

Vaishnavi (Querist)

19 May 2023 A property is jointly owned by a resident brother and a NRI sister. NRI has executed a power of attorney in favour of the resident brother to carry out the sale transaction. No amount from the sale is to be repatriated to the nri. Is it enough if the buyer deducts tax u/s 194IA @ 1% of the sale amount to be paid to the resident brother? Will withholding tax be applicable for nri? If yes, should NRI submit form 13 for nil deduction of tds even though no money is going to be transferred to her?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

19 May 2023 Advisable to file form 13 for nil TDS deduction for NRI co-owner, otherwise TDS u/s. 195 of IT act will be mandatory.

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Vaishnavi

Vaishnavi (Querist)

19 May 2023 Will TDS u/ s 195 be applicable even if there is a capital loss?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

19 May 2023 TDS will not be applicable if Nil tax deduction certificate is issued by jurisdictional ITO.
Otherwise, buyer has to deduct TDS as per IT act.

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