When it comes to domestic transactions, the structure of TDS is crystal clear, but there is much confusion about the TDS imposition in a case when an NRI wants to sell his or her property being located in India. A nri investment advisor in pune helps these NRI’s to sell their property at the best rates and lower TDS. Here this post explores how an NRI can lower or avoid the TDS deductions when selling the property in India. 

What is the meaning of TDS?

The tax deducted at source (TDS) under the Income Tax Act, 1961 is the tax that is deducted by the individual who purchases the property on the total amount of consideration. It might be possible that the buyer of property doesn’t deduct the tax at source, and thus, in such case, it becomes the responsibility of the seller to pay the appropriate capital gains tax on the transaction.

How much TDS is payable by the NRI on the sale of property in India?

The amount of TDS will be deducted is at the rate of 20% (plus surcharge and cess) on the total agreement value.

The TDS is ideally deducted as the capital gains. The buyers deduct the TDS on the amount of sales consideration. Therefore, there is always a  possibility of the TDS amount being higher compared to the actual tax liability that arises on the sale of property by NRI. 

Can an NRI lower or avoid the payment of TDS on the property sold in India, and how?

Yes, the NRI can lower or avoid the payment of TDS on the property sold in India. One way an NRI can lower the amount being deducted as TDS is with the help of exemptions and deductions available under Section 195 of the Income Tax Act, 1961. Another way an NRI can lower or avoid paying the TDS is by filing an application in Form 13 online with the department of Income Tax requesting to issue a certificate that represents that no or reduced TDS can be paid by the individual. If the Income Tax department issues such a certificate to the particular NRI, then the buyer will be eligible to deduct the TDS as per the rate mentioned in the certificate.

It is important for the NRI applying for a Nil or Lower Tax Deduction Certificate to show the following documents to the Income Tax department:

  1. PAN
  2. Passport
  3. Sales Agreement
  4. Bank account statement
  5. Income Tax Return

Bottom Line

The process of calculating and depositing the TDS to be ducted on the capital gains or sales consideration of the property sold by an NRI can be complicated. A nri tax consultant pune helps the NRI to sell the property with ease and at reduced TDS. 

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