If the seller of the property is a Non-Resident Indian (NRI), TDS (Tax Deducted at Source) is applicable under Section 195 of the Income Tax Act in India. Here’s how it generally works:
- TDS Deduction: The buyer of the property (resident or non-resident) is responsible for deducting TDS before making payment to the NRI seller.
- Applicable Rate: The applicable TDS rate for NRIs selling property in India varies based on the capital gains arising from the sale. For long-term capital gains (if the property is held for more than two years), the TDS rate is typically 20%. For short-term capital gains (if the property is held for two years or less), the TDS rate is generally 30%.
- PAN and TAN: The buyer should obtain the PAN (Permanent Account Number) of the seller and deduct TDS using their TAN (Tax Deduction and Collection Account Number).
- Form 15CA and 15CB: Before making the TDS deduction, the buyer is required to obtain Form 15CA (online declaration) and Form 15CB (certificate from a chartered accountant) from the seller, declaring the nature and purpose of the remittance. These forms ensure that the tax authorities are informed about the foreign remittance and taxes deducted.
- Double Taxation Avoidance Agreement (DTAA): The TDS rate may be affected by any applicable DTAA between India and the country where the NRI seller resides. Under the DTAA, the rate of TDS may be lower if certain conditions are met.
- Tax Compliance: It’s important for both the buyer and the NRI seller to comply with tax laws and regulations to avoid any penalties or legal issues.
Given the complexity and potential variations in tax laws, it’s advisable for both parties involved to seek guidance from tax professionals or chartered accountants to ensure compliance with applicable regulations and to optimize tax implications. If you are also looking for Lower deduction Certificate you can consult us at ebex consulting. We provide the best services for Lower deduction TDS Certificate.
