glidor@gmail.com
21068 Points
Joined January 2010
20% deduction is made on ground of capital gain tax for NRI,
The tax is to be deducted on income only i.e on the amount of capital gains arising to the non-resident out of the total consideration.
But how will the payer determine the amount of capital gains arising to the non-resident transferee.
The answer lies in sub-sections (2) & (3) of section 195. Under, the provisions of these sub-sections the payer or transferor/payee may make an application to the jurisdictional Assessing officer to determine the sum of capital gains on which tax is to be deducted.
The application to the AO will be made in the prescribed form.
The amount determined by the AO will be the amount on which tax is to be deducted. However, if no such application is made by the payer or the payee to determine the sum chargeable to tax, the tax will be deducted on the entire consideration for sale of immovable property.