How to pay TDS on property purchase from NRI?

According to Section 195 of the Income Tax Act, TDS must be subtracted from the amount of the capital gain that results for the non-resident if you buy an immovable property (such as land, a building, an apartment, etc.) from them. Coming to your query, how to pay TDS on purchase of property from NRI? When purchasing a property from NRI, the buyer is required to deduct TDS under Section 195 of the Income Tax Act.

1. The TDS rate depends on the nature of the property and the NRI seller\'s tax liability:

2. 20% on long-term capital gains (if the property is held for over 2 years).

3. Taxable according to income tax slab on short-term capital gains (if the property is held for 2 years or less).

4. Add applicable surcharge and cess, making the effective rate higher.

5. The buyer must apply for a Tax Deduction and Collection Account Number (TAN) using Form 49B on the NSDL website, as TAN is mandatory for TDS payment.

6. Deduct TDS on the total consideration or on the capital gains (if the NRI gets a lower TDS certificate from the Income Tax Department).

7. Deduct the TDS amount before making the payment to the NRI seller. Deposit the deducted TDS with the government using Challan ITNS 281 online or at authorised banks.

8. File Form 27Q (quarterly) to report the TDS deduction. Mention the NRI’s PAN and other details correctly. If the NRI does not have a PAN, a higher TDS rate (20%) applies.

9. Issue Form 16A (TDS certificate) to the NRI seller as proof of tax deduction.

I hope you understand how to pay TDS on property purchase from NRI.

Get Property Tax Assessment and Assistance on Tax Payments with NoBroker Legal Services

Read more

How do you deduct TDS on purchase of property from NRI?

As per Section 195 of the Income Tax Act, you are required to deduct TDS on property purchase from NRI on the amount of the capital gain (not on the sale proceeds) arising to that NRI. Let me tell you about the TDS rate and how to pay TDS on purchase of property from NRI:

Short Term Capital Asset – As per NRI Seller’s Income Tax Slab rate.

Long term Capital Asset – 20 percent

In the case of TDS on purchase of property from NRI section 195, there is also a provision to deduct TDS at a lower rate for which the seller (NRI) needs to apply for a lower TDS deduction from the Income Tax’s Jurisdictional Assessing Officer. The Officer will issue this certificate within 30 days. The buyer will have to deduct TDS as specified in the Certificate.

The buyer is required to get a TAN (Tax Deduction and Collection Account) number to deduct TDS when purchasing a property from an NRI.

He can request this number before the deduction of TDS on the sale of property by NRI. The buyer is responsible to deposit the collected TDS with the Income Tax Department within 7 days after the end of the month in which the TDS is collected. He will have to submit with Challan Number/ITNS 281. After getting receipt of the TDS deposit, the buyer can submit a TDS Return in form 27Q.

Read more:

I hope now you know how to pay TDS on purchase of property from NRI.