TDS on sale of property - Definition of NRI for OCI residing in India
This query is : Resolved
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25 June 2023
I have a few questions. I am selling a plot. I am a OCI residing primarily in India. I am also providing access to the plot via another section of my property for which I am charging separately.
Questions:
1. Though a citizen of another country, I am residing primarily in India. When selling property does the buyer need to deduct TDS? Online guidance surprisingly states that the answer is no. That it is the residency status and not the citizenship that matters.
2. Is the TDS percentage the same irrespective of whether the payment is made for sale of property or for access/use of another property.
3. If the buyer does not deduct TDS then do I file taxes in India at year-end. My income is below the lowest required for filing taxes in both India and the other foreign country of which I am a citizen (due to substantial losses in business).
4. Do I need RBI clearance for selling a property to an Indian citizen residing in India?
Questions:
1. Though a citizen of another country, I am residing primarily in India. When selling property does the buyer need to deduct TDS? Online guidance surprisingly states that the answer is no. That it is the residency status and not the citizenship that matters.
2. Is the TDS percentage the same irrespective of whether the payment is made for sale of property or for access/use of another property.
3. If the buyer does not deduct TDS then do I file taxes in India at year-end. My income is below the lowest required for filing taxes in both India and the other foreign country of which I am a citizen (due to substantial losses in business).
4. Do I need RBI clearance for selling a property to an Indian citizen residing in India?
25 June 2023
1. TDS will depend upon your residential status as per IT act.
2. No, both are different as per act.
3. You need to pay tax including advance tax and file ITR.
4. No.
2. No, both are different as per act.
3. You need to pay tax including advance tax and file ITR.
4. No.
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25 June 2023
Thank you so much Mr. Rambhia. This is so informative. Two follow up questions:
1. "TDS will depend upon your residential status as per IT act."
I am a OCI card holder and have not left the country in the past three years. So, what will be
the residential status as per IT act and what will be the TDS percentage for sale of Rs. 50 lakh plus but less than 1 Cr?
2. What is the TDS percentage for providing access though this will not be relevant if no TDS is applicable to me based upon your answer to my above question.
Your precise answer will be extremely helpful.
1. "TDS will depend upon your residential status as per IT act."
I am a OCI card holder and have not left the country in the past three years. So, what will be
the residential status as per IT act and what will be the TDS percentage for sale of Rs. 50 lakh plus but less than 1 Cr?
2. What is the TDS percentage for providing access though this will not be relevant if no TDS is applicable to me based upon your answer to my above question.
Your precise answer will be extremely helpful.
25 June 2023
1. As per IT act, you are resident Indian. Hence sec. 194 IA shall apply, i.e TDs rate of 1%.
2. For rights of access, if you are combining it in same agreement or giving permanent right, it will be same as 1%. Otherwise, it would differ upon the terms and payment method.
2. For rights of access, if you are combining it in same agreement or giving permanent right, it will be same as 1%. Otherwise, it would differ upon the terms and payment method.
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25 June 2023
Can you send me a link to the exact number of days and requirements for a OCI to be termed Resident Indian. It appears that these numbers keep changing with new amendments to the IT Act.
25 June 2023
https://vakilsearch.com/blog/taxation-rules-for-people-with-dual-citizenship/#:~:text=AN%20OCI's%20foreign%20income%20and,by%20the%20country%20of%20origin.
https://www.wisenri.com/overseas-citizen-of-india-oci/
In your case, you stay more than 182 days in a financial year, that is sufficient clause for your to be considered as Resident Indian.
https://www.wisenri.com/overseas-citizen-of-india-oci/
In your case, you stay more than 182 days in a financial year, that is sufficient clause for your to be considered as Resident Indian.
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25 June 2023
https://www.taxmann.com/post/blog/all-about-the-residential-status-under-the-income-tax-act
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26 June 2023
Thank you Sir. This is very helpful! I have gone thru the links. I presume that the TDS is 1% irrespective of whether a resident is an Ordinary Resident or not. I found that there is further categorization of Resident in India status into Ordinary Resident and Resident but not Ordinary Resident.
26 June 2023
The categorization is ROR (Resident- ordinary Resident) and RNOR (Resident- Not ordinary resident)....
But in your case TDS deduction remains u/s. 194IA IT act, i.e. 1%.
But in your case TDS deduction remains u/s. 194IA IT act, i.e. 1%.
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26 June 2023
Your responses were backed by corroborative links and explanation.
Can't find all the words to thank you...
Can't find all the words to thank you...
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26 June 2023
Thanks for appreciation.
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