If you are a resident Indian and you are planning to buy a property from NRI then you shall keep few points in mind:
1) Provisions in Income Tax for buying a property from NRI is different from buying a property from resident Indian.
2) For Nonresident sellers, rate of TDS (Tax Deducted at Source) is different from resident sellers.
3) TDS rate applicable when you buy a property from NRI is around 20% on Sale consideration.
| Sale consideration (INR) | TDS Rate (TDS + Surcharge + HEC) |
|---|---|
| 0-50 Lakh | 20.8% |
| 50 lakh -1 crore | 22.88% |
| 1 crore- 2 crore | 23.92% |
| 2 crore – 5 crore | 26 % |
| Above 5 crore | 28.496 % |
4) TDS rate slab when a resident Indian buy a property from NRI is:
5) As TDS rate applicable for NRIs seller is quite high, NRI can approach their assessing officer to get a Lower/NIL deduction certificate which will be issued on the basis of the actual capital gain. In that case, once this certificate is issued by the income tax authorities then buyer shall deduct TDS on the basis of TDS rate mentioned on that certificate.
6) Getting this certificate is an online process and may take time but buyers should cooperate keeping in mind the hardships faced by NRIs to complete the process.
7) Buyer should deduct that applicable TDS amount from the sale consideration and give balance amount to the seller. If payments are done in instalments, then TDS shall be deducted for each instalment and balance payment shall be made.
8) After deducting TDS, buyer shall deposit that TDS amount to income tax authorities through Challan no./ITNS 281. Please note, Form 26QB (TDS on property) is not applicable if seller is an NRI. Above challan is available at following link:
https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
9) The amount deducted shall be deposited to department on or before 7 days from the end of the month in which tax is deducted.
10) Once tax is deducted, a statement/TDS return i.e Form no. 27Q shall be submitted after the end of the quarter.
11) Due date of submitting above return is as follows:
| For the quarter ending | Due date of submission of TDS returns |
| June 30 | July 31 |
| September 30 | October 31 |
| December 31 | January 31 |
| March 31 | May 31 |
12) The income tax authorities have revised the TDS return filing date for 4th quarter of FY: 2020- 2021 from 31st May 2021 to 30th June 2021.
13) To complete the process, buyer shall have an account on the below website of “Traces”:
https://www.tdscpc.gov.in/app/login.xhtml
14) Once TDS return is filed, then buyer can download the TDS certificate by login to his traces account within few days of filing the return.
15) The Buyer should keep the NRI seller informed and should provide TDS challan & TDS certificate to the seller once they are available for download.
Disclaimer: In this article, I tried to explain the process in layman language just to give you a rough idea of the process. Please note, facts and figures of each case are different and we advise you to take professional advice to know tax implications in your case and to complete the TDS return filing process while buying a property in India. This article is just to make you understand very basics of the process in a simple way.
Please do let me know if you still have any questions related to above. You can write to me at ushma@nricaservices.com or call/WhatsApp me at +91 9910075924.