Tds on sale of immoveable property by nri
This query is : Resolved
09 April 2015
Is 194 IA applicable to NRI seller?
If not,then is TDS to be deducted at a higher rate?
Can he avail the benefit of re investment of Capital Gains?
If not,then is TDS to be deducted at a higher rate?
Can he avail the benefit of re investment of Capital Gains?
09 April 2015
1. No.
2. Section 195 applies.
3. Yes.
2. Section 195 applies.
3. Yes.
09 April 2015
So, if the entire capital gains is reinvested ,then he can exemption u/s 54,54ec etc. But then the buyer will have to deduct tax at a higher rate.
So, will the NRI have to claim refund by filing a Income tax return? Or should the seller(NRI) approach the AO for certificate for lower deduction ?
So, will the NRI have to claim refund by filing a Income tax return? Or should the seller(NRI) approach the AO for certificate for lower deduction ?
10 April 2015
Either to file return and seek refund or avail section 197(1).
Message likes :
1 times
13 April 2015
If the buyer does not deduct TDS,then paying tax on LTCG by filing an IT return (by the seller)considered valid ?
27 July 2025
Here’s a clear explanation regarding TDS on sale of immovable property by an NRI:
---
### 1️⃣ **Is Section 194-IA applicable to NRI sellers?**
* **No**, Section 194-IA (which mandates TDS @1% on sale of immovable property by resident sellers) **does NOT apply to NRIs**.
* Instead, **Section 195** applies to payments to NRIs.
---
### 2️⃣ **What TDS rate applies under Section 195 for NRI sellers?**
* The buyer must deduct TDS on the **gross sale consideration** (not just capital gains) at the **rates specified under DTAA or the Income Tax Act**.
* Usually, the rate is **higher**, often 20% or more (plus applicable surcharge and cess), or as per DTAA between India and the NRI's country of residence.
---
### 3️⃣ **Can the NRI seller avail exemption by reinvestment of Capital Gains (Section 54, 54EC etc.)?**
* **Yes**, NRIs can claim exemptions on LTCG by reinvesting as per Sections 54, 54EC, etc., by filing their Income Tax Return in India.
---
### 4️⃣ **How to get relief from higher TDS deduction?**
* Since TDS is on **gross consideration** (which is often much higher than capital gains), the NRI can:
* **File Income Tax Return (ITR)** in India to claim refund of excess TDS.
* Or, **apply to Assessing Officer (AO) for a certificate under Section 197(1)** for lower or no TDS deduction before the transaction.
---
### 5️⃣ **If the buyer does not deduct TDS, can NRI seller pay tax by filing ITR?**
* **Yes**, the NRI seller can pay the LTCG tax by filing an ITR.
* However, **buyer is legally liable to deduct TDS** under Section 195.
* If buyer fails to deduct TDS, buyer is liable for **disallowance and penalty**.
---
### Summary Table
| Question | Answer |
| ------------------------------------------- | --------------------------------------------------------------------------- |
| Applicability of Section 194-IA to NRI | No, Section 195 applies |
| TDS rate on sale consideration for NRI | Higher rate as per Income Tax Act/DTAA |
| Exemption on Capital Gains available to NRI | Yes, by reinvestment and filing ITR |
| Relief from higher TDS | File ITR for refund or get lower deduction certificate under Section 197(1) |
| Buyer not deducting TDS | Buyer liable; seller can pay tax via ITR |
---
If you want, I can help draft the application for lower deduction certificate or guide on filing the ITR for NRI. Want me to?
---
### 1️⃣ **Is Section 194-IA applicable to NRI sellers?**
* **No**, Section 194-IA (which mandates TDS @1% on sale of immovable property by resident sellers) **does NOT apply to NRIs**.
* Instead, **Section 195** applies to payments to NRIs.
---
### 2️⃣ **What TDS rate applies under Section 195 for NRI sellers?**
* The buyer must deduct TDS on the **gross sale consideration** (not just capital gains) at the **rates specified under DTAA or the Income Tax Act**.
* Usually, the rate is **higher**, often 20% or more (plus applicable surcharge and cess), or as per DTAA between India and the NRI's country of residence.
---
### 3️⃣ **Can the NRI seller avail exemption by reinvestment of Capital Gains (Section 54, 54EC etc.)?**
* **Yes**, NRIs can claim exemptions on LTCG by reinvesting as per Sections 54, 54EC, etc., by filing their Income Tax Return in India.
---
### 4️⃣ **How to get relief from higher TDS deduction?**
* Since TDS is on **gross consideration** (which is often much higher than capital gains), the NRI can:
* **File Income Tax Return (ITR)** in India to claim refund of excess TDS.
* Or, **apply to Assessing Officer (AO) for a certificate under Section 197(1)** for lower or no TDS deduction before the transaction.
---
### 5️⃣ **If the buyer does not deduct TDS, can NRI seller pay tax by filing ITR?**
* **Yes**, the NRI seller can pay the LTCG tax by filing an ITR.
* However, **buyer is legally liable to deduct TDS** under Section 195.
* If buyer fails to deduct TDS, buyer is liable for **disallowance and penalty**.
---
### Summary Table
| Question | Answer |
| ------------------------------------------- | --------------------------------------------------------------------------- |
| Applicability of Section 194-IA to NRI | No, Section 195 applies |
| TDS rate on sale consideration for NRI | Higher rate as per Income Tax Act/DTAA |
| Exemption on Capital Gains available to NRI | Yes, by reinvestment and filing ITR |
| Relief from higher TDS | File ITR for refund or get lower deduction certificate under Section 197(1) |
| Buyer not deducting TDS | Buyer liable; seller can pay tax via ITR |
---
If you want, I can help draft the application for lower deduction certificate or guide on filing the ITR for NRI. Want me to?
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