18 February 2014
A non-resident having a long-term property in India intends to sell it to a resident at a net consideration of Rs. 1 crore. The cost of acquisition to the non-resident seller was Rs. 90 lacs, 5 years ago. The non-resident wants to apply to AO for zero deduction of tax at source as he intends to deposit the amount of capital gains in prescribed bonds.
What is the procedure that he is required to follow? Please provide the form no. which he is required to submit.
Any Non Resident Indian from whose Income the Tax is likely to be deducted at source can apply to obtain exemption for tax deduction provided his/her taxable Income in India is less than Rs.1,50,000/- per year. Or if the tax likely to be deducted is more than the estimated tax liability, is eligible to apply for certificate permitting deduction of tax at lower rate.
TDS including surcharge of 22.66% will be calculated only on the capital gains and not on the sale price which will not erode his profits, if any. If this gets approved by the Income Tax office, then the buyer of the NRI’s property can make payment to him in full (ie: sale price), whereas a certificate of (TDS on capital gains) will be issued separately to the NRI.
This procedure takes about 2 to 4 weeks, and will require the NRI to submit some key documents like his sale-agreement, PAN, income tax returns, bank statements and so on.
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