TDS on property sale by NRI

Unless the NRI seller obtains 'lower TDS deduction certificate' from his Jurisdictional ITO,  it is advisable to deduct 12.50% tax + surcharge+cess over total sell value, u/s. 195 IT act. (when purchased after 22.07.2024)

Thanks but the flat was purchased in 2006, so will the NRI get indexation benefit? There is no lower TDS rate certificate, so can TDS be done @ 20% after giving indexation benefit to NRI? I am keen to know about availability of indexation benefit after budget 2024.

Purchaser is concerned about TDS deduction rate. If Seller do not issue any Lower TDS certificate, he is liable to deduct TDS at prevailing rate, which is 12.5% over full sale consideration.

Yes, NRI seller can also get indexation benefit with 20% rate over LTCG, while filing the relevant return.

According to the regulations, the TDS return for Q3, which covers the period from October 1 to December 31, must be filed by January 31 of the following year.  Filing before the quarter-end may lead to errors or rejection. While it's technically possible to prepare and submit the return before the quarter-end.

For a flat acquired in 2006, indexation is generally available when computing the NRI seller’s long-term capital gain, and section 195 TDS is on the amount chargeable to tax—not automatically on the gross sale consideration. The buyer should, however, obtain a lower/nil-deduction certificate under section 197 or an appropriate order before withholding only on the estimated gain; absent that, the buyer faces exposure for short deduction and may have to withhold on the gross amount.

• For a transfer on or after 23 July 2024, the general LTCG rate is 12.5% without indexation. A resident individual/HUF may use the transitional protection for land or building acquired before that date, so tax under the amended rules cannot exceed tax under the old rules, which apply 20% with indexation. That protection is not extended to an NRI. Accordingly, the NRI generally computes LTCG at 12.5% without indexation for a post-22 July 2024 transfer; the 2006 purchase date does not itself entitle the NRI to the old 20%-with-indexation regime.
• The 12.5% is the applicable capital-gains tax rate, not a stand-alone TDS rate. Section 195 withholding must account for the tax chargeable, including applicable surcharge and cess. The buyer should not simply deduct 20% of the gain—or 12.5% of the gain—without addressing the section 195 amount and obtaining the lower-deduction order where appropriate.
• The relevant transfer date, sale consideration, cost/improvement records and the seller’s other income can affect the computation and withholding. For a sale completed before 23 July 2024, the earlier 20%-with-indexation rules generally apply.

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