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:
Applicable TDS ratesShort Term Capital Asset – As per NRI Seller’s Income Tax Slab rate.
Long term Capital Asset – 20 percent
Effective TDS rates as per ‘Long Term Capital Gain’| Particulars | Effective TDS rate | ||
| Income is less than Rs. 50L | Income is Rs. 50L – Rs. 1 Cr. | Income is more than Rs. 1 Cr. | |
| Long Term Capital Gain Tax Rate | 20 percent |
20 percent |
20 percent |
| Add – Surcharge | 0 percent |
10 percent (on above rate) |
15 percent (on above rate) |
| Total Tax including surcharge | 20 percent |
22 percent (20% + 2%) |
23 percent (20% + 3%) |
| Add – Health and education cess | 4 percent |
4 percent (on above rate) |
4 percent (on above rate) |
| Effective TDS Rates | 20.80 percent |
22.88 percent |
23.92 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.
How to Pay TDS on Property Purchase from NRIThe 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.
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Read more:
What is TDS on sale of property by NRI?
How do you deduct TDS on purchase of property from NRI?
I hope now you know how to pay TDS on purchase of property from NRI.
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How to pay TDS on property purchase from NRI?
Garima
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2 Year
2021-12-23T18:24:34+00:00 2021-12-27T18:04:11+00:00Comment
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