Tds from nris on selling property in india under section 195

TDS 2789 views 4 replies

LAJPAT RAI THAKRAL

MEMBER. PERMANENT LOK ADALAT

30 Points Joined July 2012

My son who is an NRI bought an apartment in Gurgaon in the year 2009 with a consideration amount of Rs 44 lacs plus 3.50 lacs as stamp duty and he has a registered sale deed showing therein his residential address of abroad i.e. USA.

Now he intends to sell this apartment with a proposed sale price of 1.80 crores. The buyer after consulting his chartered accountant informed that TDS @ 20% will be deducted on the whole consideration of 1.80 crores under section 195 of the IT act of government of india.

Our question is how to save deduction of TDS.

I understand that Tax authorities can grant TAX EXEMPTION CERTIFICATE for which application has to be submitted on form 13.

QUESTION NO 1.

Please guide How much time it is usually taken by the AO to issue such certificates.?

2. What are the documents required for getting such tax exemption.?

3. Can the application on form 13 to get tax exemption be filed on line.?

4. If not, whether I being his father can apply for getting such tax exemption certificate if a power of attorney on plan paper or on e mail is sent by my son in my favour to apply for such certificate.

QUESTION NO. 2

CAPITAL GAINS exemption.

As as per cost inflation index of income tax department the figures of 47( cost inflation index 2009-10 = 632) lacs becomes around 70.66 as per cost inflation index 2012-13 =932) hence capital gain of 1.09 crores.

As per existing rules if the amount of Rs 1.09 crore is invested for buying a new residential property, entire long term capital gains tax can be saved. Pl confirm whether capital gain of 1.09 is to be invested or entire sale proceeds of 1.80 crore investment will save capital gains tax @ 20%

Also please clarify if another residential apartment is also owned by by NRI son, there is any restriction to get such capital gains tax exemption.Pl tell if such capital gains is for only one residential property/apartment ownership and not for those who have more than one residential property/apartment. The second apartment is not being sold now and will be retained.

Replies (4)

Mihir

Wealth Manager

5293 Points Joined December 2008

I think complete exemption from TDS is not possible. If one obtains exemption certificate from AO, then the payer may not deduct TDS from sale price, but he will deduct TDS from capital gain at the rate of 20%. This TDS deduction can be claimed as tax credit in your IT returns. You may hire a CA who will represent you to the AO to get exemption certificate. Documents like PAN, sale deed, bank statements, IT returns etc will be required.

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LAJPAT RAI THAKRAL

MEMBER. PERMANENT LOK ADALAT

30 Points Joined July 2012

Sir., Thanks for your quick reply. If you peruse form 13 a standard form on incometax web site, there is no requirement to enclose such documents however practically AO may demand such documents. Please clarify if such tax exemption application on form 13 can be filed on line. However deducting TDS under section 195 is legal liablity of the buyer to deduct such TDS from seller on whole amount of sale price and deduction of TDS for capital gain is not legal responsiblity of the buyer and seller has to pay and then claim such exemption after filing ITR.I wish to know the practical aspect of obtaining TAX EXEMPTION CERTIFICATE i.e. how much time AO takes to issue the same, formalities and documents generally required by him for issue of such certificate and any other practical problems etc. Pl guide.

LAJPAT RAI THAKRAL

BA.,CAIIB.,PGDM.,

MEMBER OF JURY

PERMANENT LOK ADALAT

PUBLIC UTILITY SERVICES

DISTT. COURTS AMRITSAR

Mihir

Wealth Manager

5293 Points Joined December 2008

NRI will have to produce documents to the AO to prove that he will reinvest LTCG in another property within a specified period, which may also include an affidavit. Tax exemption certificate can be obtained within a months time.

Nilesh

B.Com

22 Points Joined May 2015

Hello CA Club, Query : I (NRI) wants to sell a flat in India. I had purchased the flat in India in end of the year 2010 when I was not an NRI for total 49L. Now from last 2 years I am workin in USA and want to sell his flat @ 75L. Looking to the indexations for last year (2014-2015 = 1024) the revised flat cost comes around 71L approx and assuming the index inflation rate this year (2015-2016 = 1100) the flat cost comes around 76L approx. So below are my queries if you please address those:

1. When are the cost inflation index rate for the year 2015-2016 will be declared by Govt?

2. I am working in US and get paid in US, but my PF is still continued by my Indian Employer and as there is only PF component deposited by my Indian Employer in India which is well under the 2.5 Lakhs and which is not at all taxable as per the tax slabs, do I still a NRI for the Govt ?

3. As I hold the flat for more than 3 years and now planning to sell my flat @ 75L , consdering / assuming the current (2015-16 - indexation = 1100 as mentioned above) cost comes around 76L so there seems no capital gain tax at all as I am selling for 75L which is below or worst case equal to index cost. Please confirm if I am considered an NRI , will there be any capital gain tax ?

4. Query o TDS: As there is no capital gain tax as seen above will there be any TDS applicable ? Also whether the TDS (20%) will be on total amount 75L or it will be 1% on the 75L as I am not sure about the NRI status? I do hold the pan card.

5. I will be investing the whole amount in a new under construction property which will cost around 1 Cr so how should I take the exemption of the TDS so that there is no TDS at all ?

6. I will be getting the partial payment (30L) from purcahser and remaining balance from the purchasers Bank (45L) so in this case who will deduct the TDS - purchaser or bank ? and whether there will be any TDS as both amounts are under 50 Lakhs ?

7. the property which is to be sale is having joint owner my sister but there is no sharing ratio provided when we bought the property and I am as the primary owner paying the EMI from starting. So in this case are there any ways to avoid TDS as my sister is Indian resident & joint owner (sister is House wife) .

Please help on the above queries at the earliest possible.

Regards,

Nil