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TDS on share purchase from NRI

21 May 2025

How to deduct TDS for purchase of unlisted equity shares from NRI and the buyer(Resident of India) does not have TAN no.The sale consideration attracts Long Term Capital Gain.Please kindly help in this regard.

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Rama chary Rachakonda (Master in Accounts & high court Advocate email ID:ramachary64@gmail.com voice no:9989324294) (8276 Points)
Replied 21 May 2025

When purchasing unlisted equity shares from an NRI, the buyer (Resident of India) is required to deduct TDS on the Long-Term

Capital Gain (LTCG). Here's what you need to do: TDS Deduction -

*Section 195*: As per Section 195 of the Income-tax Act, the buyer is required to deduct TDS on the LTCG payable to the NRI seller. -

*Rate of TDS*: The rate of TDS would be 20% (plus applicable surcharge and cess) on the LTCG. No TAN Number -

*PAN of Buyer*: In the absence of a TAN number, the buyer can use their PAN number to deduct and deposit the TDS. -

*Challan No. 281*: The buyer can deposit the TDS using Challan No. 281, mentioning the PAN number and the NRI seller's details.

Compliance Requirements -

*TDS Certificate*: The buyer should issue a TDS certificate (Form 16A) to the NRI seller, detailing the TDS deducted and deposited. -

*Filing of TDS Return*: Although the buyer doesn't have a TAN, they might still need to file a TDS return (Form 27Q) for deducting tax on payments to NRIs.

Key Considerations -

*Consult Tax Professional*: Given the complexity of TDS regulations and NRI taxation, it's advisable to consult a tax professional to ensure compliance. -

*Documentation*: Maintain proper documentation, including the share purchase agreement, payment details, and TDS deposit receipts.

By following these steps and consulting with a tax professional if needed, you can ensure compliance with TDS regulations.

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Rama chary Rachakonda (Master in Accounts & high court Advocate email ID:ramachary64@gmail.com voice no:9989324294) (8276 Points)
Replied 21 May 2025

When purchasing unlisted equity shares from an NRI, the buyer (Resident of India) is required to deduct TDS on the Long-Term

Capital Gain (LTCG). Here's what you need to do: TDS Deduction -

*Section 195*: As per Section 195 of the Income-tax Act, the buyer is required to deduct TDS on the LTCG payable to the NRI seller. -

*Rate of TDS*: The rate of TDS would be 20% (plus applicable surcharge and cess) on the LTCG. No TAN Number -

*PAN of Buyer*: In the absence of a TAN number, the buyer can use their PAN number to deduct and deposit the TDS. -

*Challan No. 281*: The buyer can deposit the TDS using Challan No. 281, mentioning the PAN number and the NRI seller's details.

Compliance Requirements -

*TDS Certificate*: The buyer should issue a TDS certificate (Form 16A) to the NRI seller, detailing the TDS deducted and deposited. -

*Filing of TDS Return*: Although the buyer doesn't have a TAN, they might still need to file a TDS return (Form 27Q) for deducting tax on payments to NRIs.

Key Considerations -

*Consult Tax Professional*: Given the complexity of TDS regulations and NRI taxation, it's advisable to consult a tax professional to ensure compliance. -

*Documentation*: Maintain proper documentation, including the share purchase agreement, payment details, and TDS deposit receipts.

By following these steps and consulting with a tax professional if needed, you can ensure compliance with TDS regulations.

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