Indexation benefit for nri

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Lucky (Querist)
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03 December 2012 Is indexation benefit available to NRI for calculation of Long Tern Capital Gain

NRI is selling his Flat.
Long term capital gain is Rs. 763927/-(after considering Indexation benefit).

How much TDS is to be deducted by resident assessee purchasing the flat?

Chintan Shah

Chintan Shah (Expert)
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03 December 2012 The residential status at the time of selling the property will determine whether indexation benefit will be available or not. If at the time of selling the property, the seller is treated as a non-resident then indexation benefit is not available.

As regards withholding tax at source, the resident will be required to withhold tax at source on the selling price and not on net gain in view of recent Bangalore Tribunal decision in the case of Syed Aslam Hashmi v. ITO where it was held that in the absence of application made u/s 195(2), the buyer is required to withhold tax at source on the gross selling price and not on net gain.

There is another Bangalore Tribunal decision in the case of Mrs. Meena S Patil v. ACIT (International Taxation) reported in [2008] 300 ITR (A.T) 0317 where it was held the same.

Therefore, it is advisable for the buyer to withhold tax on gross selling price and let us the seller approach the Assessing officer to determine the withholding tax rate.