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TDS on Property in case of NRI

314 views 1 replies

Yogesh Kini

Tax Consultant

86 Points Posted on 10 March 2020

Hello Members,

My Client has executed Release Deed (50% Share) in March 2020 between Two Daughter(25% Each) and herself to become owner of Flat 50%. Now, as she is owner of flat (50%) and rest (50%) is with brother in law. They further want to execute Sale Agreement. As a result of sale deed (Not yet Executed) She will sell the 50% share to Brother in law. In mutual Understanding he will pay Rs.85 Lakhs which will be adjusted to repaid towards outstanding housing loan of Rs.2 Crores Aprrox. for different Flat. Market Value is Rs.84 Lakhs.

Both, Lady (Seller) & Brother in law (Buyer) are NRI. In this case, I have some query,

1. What will the TDS Rate applicable to be deducted on Consideration?

2. Who will deduct TDS, Buyer or seller as both are NRI.

3. Can we approach for Lower Deduction certificate to Income Tax Office.

4. Exemptions that can be Availed in short term Capital Gains.

Suggestions are highly appreciated. Please Guide.

Replies (1)

CA Naveen Chand

Chartered Accountant

12739 Points Posted on 10 March 2020

Section 194 IA is not attracted as the payee is NRI so question of deducting TDS will not be raised as both are NRI .

1. Section 195 shall be attracted and TDS will be deducted as per DTAA rate or rate in force.

2. Seller

3. Application to A.O can be made in Form 13

4. Amount invested in Bonds of NHAI , RECL, IRFCL or PFCL with in 6 months from date of transfer

Conditions : Maximum exemption u/s 54EC is Rs. 50 lacs , Lock in Period 5 Years , Capital Gains should be LTCG , Benefits of amount deposited into Capital Gain Account Scheme is not available .