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R.SHRIRAM (Articled Assistant)     14 June 2021

TDS U/s 195 for sale of house property by NRI

Hello ... This is with reference to  Section 195 for TDS on sale of house property  by NRI . I have following queries ; 

1) If the seller is an NRI, and the sale value  is not above  INR 50 lakhs, does the provisions of section 195 ,  TDS deduction still applicable ?

2)  Does the onus still lies with the buyer to deduct TDS if the sale value does not exceed 50 lakhs INR ?

3)  What if the buyer does not deduct TDS but the seller pays Self Assessment tax for the tax on LTCG after indexation benefit ?

4)  If the tax on capital gain is paid as Self Assessment tax after taking into account the  calculation of indexation benefit for cost of acquisition, can the Assesseing officer or the tax department  levy capital gain tax on the  whole sale value and not on the Net gains after indexation benefit ? Can the indexed cost of acquisition benefit be disallowed  ?

5)  What are the penalties or interest , if the tax has been paid as Self Assessment tax by the seller and the buyer has not deducted TDS.

 

Hope the query will be acknowledged and kindly reply...

 

Thank you  very much in advance... Stay safe .. 

 

 



 4 Replies

Shankar Rugge

Shankar Rugge   15 June 2021

Hello

Where a resident makes a purchase of a property from an NRI, TDS is deducted at the rate of 20% (plus cess and surcharge, as applicable) if there are long-term capital gains; the rate is 30% (plus cess and surcharge, as applicable) in case of short-term capital gains. There is no minimum threshold applicable for deduction of TDS, so TDS will apply where the consideration is less than ₹50 lakh as well, as per Section 195 of the Act.

 

R.SHRIRAM

R.SHRIRAM (Articled Assistant)     15 June 2021

Hello

Thank you for prompt reply. There is no minimum threshold applicable for deduction of TDS, alright, but suppose, the buyer did not deduct TDS and the seller has paid the TDS amount as Self Assessment Tax, then what happens ? Will there be any levy of penalty or interest for non deduction of TDS by the buyer ? Also since  Self Assessment tax is paid, will the tax dept disallow the cost indexation benefit ? What implications will the buyer has to face, if any..

 

Thank you once again

Shankar Rugge

Shankar Rugge   15 June 2021

I think you need to approach CA who deals with NRI. TDS has to be deducted. I dont know whether u have finalised the sale and entered legal agreement with the registration authority. In that case it will be difficult to deposit TDS by buyer. Better approach some expert CA in this matter

R.SHRIRAM

R.SHRIRAM (Articled Assistant)     15 June 2021

Thank you for the reply... Will do..


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