Recommendations to Government Regarding TDS Rules When Purchasing Property from NRI

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HowCon the Govt Simplify TDS Rules for Buying a
NRI
House
Get to know the important suggestions for the
government to simplify thc TDS rules when
buying a house property from non-resident Indians
(NRIs) in India. Purchasing a property in India
entails navigating through intricate tax
requirements, particularly when dealing with a
Non-resident individual (NRI) as the seller. For
resident individual buyers, it is mandatory under
the law to withhold tax from the payment made to
the seller. However, if thc seller is a tax
resident in India, the Tax Deducted at Source
(TDS) compliance is applicable only if the sales
consideration exceeds As 50 lakh. In such
instances, the buyer must deduct tax at a rate of
10/ at the time of payment.
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How Govt Con Simplify TDS Regulations for
Purchasing Property from NRI
The tax departmcnt has introduced a streamlined
compliance process, involving the submission of a
single Form as a tax paymcnt challan-cum-return
under the 6uycrs Permanent Account Number (PAN).
This eliminates thc need for a Tax Deduction
Account Number (TAN) for thc buyer or a separate
TDS return filing. Conversely, when acquiring
property from an NRI seller, the TDS compliance
requirements become more intricate. In addition
to this complexity, the buyer is obligated to
deduct tax at the applicable income tax slab
rates before making the payment to the NRI seller.
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Tax Compliance Process Acquiring Property from on
NRI Seller is Below

• TDS Deposit
• The buycr must deposit thc TDS deducted to the
  government treasury as payment on or before the
  Cth day of the subsequcnt month in which the
  TDS was deducted from the seller.
• TAN (Tax Deduction Account Number)
• Under section 203A of the Income Tax Act a buyer
  is required to have a TAN before a TDS dcduction.
  TAN is a l0-digit alphanumeric number. To receive
  a TAN a person is rcquired to submit the Form
  onlinc or offline at the Tin Facilitation Center
  (TIN FC) handled through the NSDL.

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TDS Payment at Time
The buyer is required to deduct the TDS at an
applicable incoiiie tax slab rate (which might
work out to be more compared to TDS on the
resident sellcr) while making payments to
NRIs. TDS Certificate Following the submission
of TDS returns, the buyer must furnish a TDS
certificate (Form 16A) to the NRI seller within
15 days from the e-TDS return due date.
TDS Return Filing Upon completing the
TDS deposition, the purchaser is required to
submit an e-TDS return (Form 27_at_ within the
stipulated deadline. This e-TDS return is filed
quarterly, with the last day of the month
succeeding each quarter's conclusion for the
initial three quartcrs. For the final quarter,
the return must be filcd by May 31st of the
subsequent ycar.

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Tax Compliance Procedure for Purchasing Property
from on NRI Seller
The purchaser has the option to electronically
filc the e-TDS return aftcr authentication
through EVA or a digital signature.
Altcrnativcly, an offline TDS return can be
lodged at a TIN facilitation centre.Failure to
adhere to this process, discrepancies, or any
delays may subject the buyer to penalties and
interest. Furthermore, in the context of
purchasing a property from a re.sident seller,
TDS compliance is mandatory only if the sales
consideration exceeds Rs 50 lakh. However, when
dealing with a non-resident seller, there is no
such threshold limit for tax deduction. This
implics that even if the sales consideration is
less than Rs SO lakhs, the buyer is still
obligated to comply with TDS provisions when
transacting with NRI sellers.
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Process Acquiring Property from on NRI Seller
The acquisition of a property is a non-recurring
transaction, and individuals may find themselves
compelled to obtain a TAN solely for complying
with TDS requirements when purchasing a house
front a non-residcnt seller. In many instances,
this LAN may remain unused after the transaction,
rendering it inactivc and contributing to a
growing number of inactive TANs in the income tax
system. Furthermore, the intricacies of TDS
compliance often lead individuals to seek
assistance from tax experts, resulting in
additional expenses. Thc process of acquiring
property from an NRI seller is inherently liiore
coiiiplex and time-consuming compared to
transactions involving a resident sellcr.
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Procedure for Purchasing Property from on NRI
Seller
To promote easc of transactions and alleviate
compliancc challcnges in property dcalings
with NRIs, the government should consider
simplifying the TDS compliance process for
individual buyers. This could involve aligning
thc TDS compliance requirements for
individual buyers when dealing with both resident
and NRI sellers, fostering a more
straightforward and uniform approach. The
government should eliminate the requirement for
buyers to obtain a TAN when dealing with NRI
sellers.
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In What WoyAre the Gains From a Property Sole
Yoxed for NRI in India?
Non-resident Indians (NRIs) selling property
located in India are liable to pay capital gains
to. When an NRI sells property in India, the
buyer is required to deduct TDS under Section 195
of the Income Tax Act of 1961. It is important to
note that, unlike Section 194IA, the tax
deduction rate is not fixed at 1 in this
scenario. The income tax regulations for NRIs
concerning capital gains in India are outlined as
follows
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When a Non-Resident Indian (NRI) disposes of a
capital asset
held for a period of 24 months or more, any
resultant profit is
categorized as a long-term capital gain.
In the case of listed securities such as stocks
and equity-oriented mutual funds, a 10Ue
long-term capital gains tax is levied without the
benefit of indexation if the gains exceed INR 1
lakh in a financial year. For immovable property
and other assets, the long-term capital gains tax
is generally imposed at a rate of 20Pn,
accompanied by indcxation bencfits.
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Indexation Benefit
The indexation benefit enable.s the modification
of the acquisition cost of an asset to account
for inflation during the holding period, thereby
mitigating the taxable capital gains. In the case
of long-term capital gains related to assets
other than listed securities, the indexed
acquisition cost is determined by applying the
Cost Inflation Index (CII) as published by the
Income Tax Deqartmcnt.
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Tax Deductions and Exemptions
Section 54F provides an exemption from capital
gains tax for thc sale of any asset, excluding
residential property, if the proceeds are
reinvested in a residential property.
Section S4 offers a waiver when sclling a
residential propcrty and utilizing the proceeds
to invest in another property.
Section 54EC allows a deduction for investing in
.specified bonds within a designatcd period to
qualify for the exemption from capital gains tax.
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Tax Deducted at Source (TDS)
When a Non-Resident Indian (NRI) sells propcrty
in India, the purchaser is obligated to withhold
Tax Deducted at Source (TDS) on the sale proceeds
according to the applicable rates. The TDS rates
for NRIs may differ based on the property type
and the sales amount. BAG Infotech's Gen TDS
return filing software is an efficient tool that
enables you to accurately calculate your tax
deductions, exemptions, and house property
allowances with utmost casc. With this software,
you can also effortlessly compute your TDS
amount, ensuring that you comply with the
rcgulations and laws related to TDS
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Frequently Asked Questions on YDS on Sole of
Property by Non-Resident (FAQs)
QJ Which information should be furnished to the
Tax Officer?
The Tax Officer will need information including
the property's purchase price, the date of
acquisition, and any expenses related to
renovation or construction.
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Frequently Asked Questions on TDS on Sole of
Property by Non-Resident (FAQs)
Q2 What occurs in case more TDS is deducted than
the OctuOl gOx liobllity?
INthere is an excess deduction of TDS, the seller
has the option to claim a refund for the surplus
amount during the process of filing their Income
Tax Return.
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Q3 Which certificate should the buyer provide to
the
seller? The buyer should furnish Form l6A to the
seller once it is available. This form acts as a
certificatc for the TDS deduction carried out by
the buyer.
Q4 How should TDS be handled in the case of
multiple payments for the property?
In instances of multiple payments, TDS should be
deducted at the time of each payment and
not solely during the property registration
process.
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Q5 What are the consequences if TDS is
incorrectly deducted or not deducted at all?

• If TDS is either wrongly deducted or not deducted
  at all,
• the Income Tax Department will not take any
  action
• against the seller. Instead, the department will
  pursue the buyer to fulfil the required TDS
  deposit. If the buyer fails to deduct TDS or
  deducts an insufficient amount, the Income Tax
  Department will recover the TDS from the buyer.

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