As per Section 195, a buyer purchasing a property from NRI is liable to deduct TDS (Tax deducted at source) on the amount of total value of sale consideration, before making any payment to the NRI. ... Short term capital gain= Sale consideration – [Cost of acquisition + Cost of improvement].
Reduce your TDS Liability by filing application in Form 13
To reduce the TDS on Sale of Property by NRI, the NRI is required to file an application in Form 13 with the Income Tax Department for issuance of Certificate for Nil/ Lower Deduction of TDS.
If an NRI is selling property in India, the buyer is required to deduct TDS at the rate of 20% in case of long-term capital gains. However, if the property is sold before two years, TDS shall be deducted at the rate of 30% as a short-term capital gains tax.
Under the provisions of section 195, any person who is responsible for paying any interest or any other sum chargeable to tax is liable to deduct tax at source. This is applicable in a case where the payment is being to a non-resident(excluding company) or a foreign company.
Rate of TDS under Section 195
For payments made according to DTAA rates, no additional education cess or surcharge is applicable.
In case the buyer fails to deduct the TDS (wholly or partly) or fails to deposit the TDS with the Government, then the buyer (i.e. Deductor) would be liable to pay penalty under section 271C. Here, the defaulter would be required to pay penalty amounting to sum equal to the TDS not deducted or TDS not paid.
The responsibility to deduct TDS on Property Sale rests solely with the Buyer even if it is financed by Home Loan or property is purchased from the builder. In some cases, Bank can deduct TDS on property from disbursement and help in depositing TDS on buyers behalf but they are not obliged to do so.
NRIs can claim exemptions under Section 54, Section 54 EC, and Section 54F on long-term capital gains. Therefore, an NRI can take benefit of the exemptions from capital gains when filing a return and claim a refund of TDS deducted on Capital Gains.
If NRIs file Income Tax Returns (ITR) after the financial year has ended in India, they can claim refunds on the deducted TDS. For an NRI to claim a refund on the TDS deducted, he/she must self-compute their income and tax liability according to existing slab rates.
TDS has to be deducted by the buyer on the entire amount that is paid or credited to the seller when the amount exceeds Rs 50 lakh. For example, if a property is bought for Rs 70 lakh then TDS has to be deducted on the entire amount–that is Rs 70 lakh, not on just the Rs 20 lakh that exceeds the Rs 50 lakh threshold.
When should TDS be deducted and by whom? Any person making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such specified payment. But no TDS has to deducted if the person making the payment is an individual or HUF whose books are not required to be audited.
You need to file a TDS refund claim when the employer has deducted more tax than the actual liability. You can claim the difference amount by filing an income tax return. You will have to provide the bank account number, name of the bank, and Indian Financial System Code (IFSC) details for successful processing.
One of the ways to save on your capital gains tax is to invest in bonds within six months of the trading of the property and receiving the gains. On investing in bonds, you can claim a tax exemption under Section 54EC of the Indian Income Tax Act, 1961.
What is the rate of TDS under Section 194C- TDS on contractors? The payer is required to deduct TDS at 1% in case the payment is made to an individual or HUF, and 2% if the payment is made to any other person.
TDS is required to be deducted @1% on the whole amount as the total payment in the year exceeds Rs 75,000. Example 2 – In the above example if the contractor A is a Partnership Firm in place of individual. TDS is required to be deducted @ 3% as the sum exceeds the threshold limit of Rs 30,000 in single payment.
Foreign companies operating in India through joint ventures are required to deduct TDS (tax deducted at source) from home salary or special allowances paid abroad to their employees working in India, the Supreme Court has ruled.
Yes, if you have paid the excessive tax, it will be refunded. To get your additional tax refund, you will have to first file ITR, following which your return will be processed. If you pay any excessive tax, the government will refund it back to your bank account via ECS.
TDS or Tax Deducted at Source is an income tax that is reduced when a certain payment like rent, salary, commission, interest, professional fees, etc. is made by the person who made such a payment. ... The purpose of TDS may have been to reduce the chance of evasion by the recipient of the incomes.
The due date of payment of TDS on transfer of immovable property is 30 days from end of the month in which the deduction is made. PAN of the buyer and the seller is mandatory to make e-payment of TDS on sale of property.
The TDS rate for property purchase is 1%. Surcharge and secondary and higher education cess (SHEC) need not be added. If the property seller does not have PAN or if PAN is not quoted, then TDS must be deducted at the rate of 20%.
Then pay TDS before registering it, or income tax sleuths will come knocking on your door. ... As per this section, the buyer should provide TDS documents on transfer or sale of immovable property (mainly land or house) other than agricultural land, before registering the property.