Master in Accounts & high court Advocate
9615 Points
Posted on 06 January 2025
For TDS on immovable property purchased from an NRI, the rate of deduction is indeed 20%.
However, since the property value is less than ₹50 lakhs, the rate is reduced to 10% (as per Section 195 of the Income Tax Act).
But, you've mentioned two rates: 1. _12.5%_: This might be due to the fact that, prior to FY 2018-19, the TDS rate for property purchases from NRIs was 20%, but it was reduced to 10% for properties valued below ₹50 lakhs.
However, for properties valued above ₹50 lakhs, the TDS rate was 20%, which, with cess, became 20% + 3% (cess) = 20.6%, and later 20.6% was rounded off to 20.8% (5% of 20.6%) and then it was rounded off to 12.5% + 12% (cess) = 24% but 12.5% is the TDS rate. 2. _13% (effective rate with cess)_:
This is incorrect, as the cess is not applicable to the TDS rate in this case.
For Form 27Q, you should fill in the rate of deduction as 20% or 10% (as applicable), without considering the cess.