Many buyers unknowingly fall into a tax trap when purchasing property from Non-Resident Indians (NRIs).<\/p>\n
Under Section 195, buyers must deduct TDS before making any payments\u2014including advance or token amounts!<\/p>\n
TDS Applicability:
\nLong-Term Capital Asset\u2013 12.5% (plus surcharge & cess)
\nShort-Term Capital Asset \u2013 20% (plus surcharge & cess)<\/p>\n
Buyer Beware! Failure to deduct TDS can make the buyer an \u2018assessee in default\u2019, leading to penalty equal to the amount of TDS itself and interest liabilities in addition thereof.<\/p>\n
How to Stay Safe:
\nContact your CA and the seller to plan the transaction right from the beginning.
\nDeduct TDS before making any payment\u2014advance or token included
\nRequest your NRI seller for a \u2018Lower Tax Deduction Certificate\u2019 (Form 13) under Section 197<\/p>\n
Avoid costly surprises\u2014stay compliant and make informed decisions!<\/p>\n
Here are some key tips for buyers:<\/p>\n
Verify Seller’s Residential Status \u2013 Confirm that the seller is an NRI as per tax laws. TDS under Section 195 applies only to payments made to non-residents.<\/p>\n
Deduct TDS on the Full Sale Value \u2013 TDS is calculated on gross sale consideration, not just on capital gains. Ensure you deduct 12.5% or 20% + surcharge & cess before making any payment.<\/p>\n
Deduct TDS on Every Payment \u2013 Even advance payments or token amounts require TDS deduction before transferring funds to the NRI seller.<\/p>\n
Deposit TDS Timely \u2013 After deduction, deposit TDS with the tax authorities within 7 days from the end of the month in which payment is made.<\/p>\n
Request Form 13 for Lower TDS \u2013 If the actual tax liability is lower, ask the seller to provide a Lower Tax Deduction Certificate (Form 13) under Section 197.<\/p>\n
Seek Professional Guidance \u2013 Consulting a tax expert or CA can help navigate compliance and minimize risks.<\/p>\n
Following these steps ensures smooth transactions while avoiding legal and financial troubles!<\/p>\n","protected":false},"excerpt":{"rendered":"
Many buyers unknowingly fall into a tax trap when purchasing property from Non-Resident Indians (NRIs). Under Section 195, buyers must deduct TDS before making any payments\u2014including advance or token amounts! TDS Applicability: Long-Term Capital Asset\u2013 12.5% (plus surcharge & cess) Short-Term Capital Asset \u2013 20% (plus surcharge & cess) Buyer Beware! Failure to deduct TDS …<\/p>\n