Nri ltcg
This query is : Resolved
02 May 2013
One of my client located at singapore
Status - Individual
Residential Status - NRI
HE Purchase Flat In Mumbai on 13/06/2006
And Sold it on 01/03/2013
Transaction Took Place in Year F.Y. 2012-13
As mentioned my client is individual and he want that buyer will not deduct tax from sale proceed
So please suggest what to do so that buyer will not deduct tax.
Whether go for NIL or lower rate deduction certificate or any other way.
Please suggest me detailed procedure and relevant Sections,form no. and where to apply and documents required.
Status - Individual
Residential Status - NRI
HE Purchase Flat In Mumbai on 13/06/2006
And Sold it on 01/03/2013
Transaction Took Place in Year F.Y. 2012-13
As mentioned my client is individual and he want that buyer will not deduct tax from sale proceed
So please suggest what to do so that buyer will not deduct tax.
Whether go for NIL or lower rate deduction certificate or any other way.
Please suggest me detailed procedure and relevant Sections,form no. and where to apply and documents required.
03 May 2013
Pay due taxes and file return.
Anuj
femaquery@gmail.com
Anuj
femaquery@gmail.com
Message likes :
1 times
03 May 2013
Client is in process of opening capital gain scheme account n depositing sale consideration in that account.
He is going re invest money in new flat.
That why he is asking for NIL deduction certificate to stop buyer from deducting tax.
please give me brief about process of getting NIL Certificate based on Capital Gain Deposit Scheme Account.
He is going re invest money in new flat.
That why he is asking for NIL deduction certificate to stop buyer from deducting tax.
please give me brief about process of getting NIL Certificate based on Capital Gain Deposit Scheme Account.
03 August 2024
To address your client's situation regarding the sale of a flat in Mumbai and the desire to avoid TDS (Tax Deducted at Source) on the sale proceeds, here’s a detailed guide on obtaining a NIL or lower deduction certificate, the relevant sections, forms, and the process involved:
### **1. Understanding the Situation**
Your client is a Non-Resident Indian (NRI) who sold a flat in Mumbai. As per Indian tax laws, the buyer of the property is required to deduct TDS on the sale of immovable property. However, your client is seeking a way to avoid or reduce this deduction by obtaining a NIL or lower deduction certificate from the Income Tax Department.
### **2. Capital Gains and Taxation**
Since the sale occurred in FY 2012-13, the capital gains would be classified as Long-Term Capital Gains (LTCG), given the property was held for more than 24 months. For LTCG:
- **Tax Rate:** The LTCG on the sale of property is taxed at 20% with indexation benefits.
- **Exemptions:** Section 54 of the Income Tax Act provides an exemption if the capital gains are invested in a new residential property.
### **3. Process to Obtain NIL or Lower Deduction Certificate**
#### **A. Apply for Lower/NIL Deduction Certificate**
**1. **Application Form:**
- **Form 13**: To apply for a lower or NIL deduction certificate, your client needs to submit Form 13 to the Income Tax Department.
**2. **Procedure:**
- **Online Submission:** Form 13 can be submitted online via the Income Tax Department’s e-filing portal. Alternatively, it can be submitted in physical form at the local Assessing Officer’s office.
- **Documents Required:**
- Copy of PAN card.
- Copy of the sale deed.
- Proof of capital gains, if any, and documents related to the new property to be purchased (if applicable).
- Proof of investment in Capital Gains Account Scheme (CGAS) if applicable.
**3. **Supporting Documents:**
- Sale agreement or sale deed.
- Proof of capital gains and any investments made under Sections 54, 54EC, or 54F.
- Copy of the return filed for the relevant financial year.
**4. **Processing Time:**
- The issuance of the certificate may take a few weeks. Your client should apply well in advance of the transaction to ensure timely receipt of the certificate.
#### **B. **Capital Gains Deposit Scheme Account (CGAS)**
If your client is planning to reinvest the proceeds into a new residential property:
**1. **Open CGAS Account:**
- The sale proceeds should be deposited into a Capital Gains Deposit Scheme (CGAS) account with a nationalized bank. This account helps in claiming exemptions under Section 54.
**2. **Procedure:**
- **Visit a Bank:** Open a CGAS account with a designated bank.
- **Deposit Proceeds:** Deposit the sale proceeds in this account.
- **Reinvestment:** Reinvest the funds in a new residential property within the stipulated time frame (generally 2 years from the date of sale).
**3. **Documentation:**
- Proof of deposit in CGAS.
- Proof of reinvestment into a new residential property.
### **4. **Sections and Relevant Laws**
- **Section 194-IA:** TDS on transfer of immovable property.
- **Section 54:** Exemption on reinvestment in residential property.
- **Section 54EC:** Exemption on reinvestment in specified bonds.
- **Section 54F:** Exemption on reinvestment of sale proceeds in a residential property, if the asset sold was not a residential property.
### **5. **Action Steps**
1. **Obtain Form 13:** Apply for a lower or NIL TDS certificate by filling Form 13. Ensure that the application is supported with all necessary documents.
2. **Open a CGAS Account:** Deposit the sale proceeds into the CGAS to claim exemptions under Section 54.
3. **Reinvestment:** Ensure reinvestment into a new residential property within the prescribed period to claim exemptions.
4. **Submit Documents:** If the certificate is obtained, submit it to the buyer to ensure that TDS is not deducted or is deducted at a lower rate.
### **Summary**
Your client should:
- Apply for a NIL or lower deduction certificate using Form 13.
- Open and deposit funds into a Capital Gains Deposit Scheme (CGAS) account if planning to claim exemptions under Section 54.
- Provide the relevant documents and proofs to support the application.
This process will help in managing the TDS on the sale proceeds and ensure that the capital gains are adequately addressed under the applicable tax laws.
### **1. Understanding the Situation**
Your client is a Non-Resident Indian (NRI) who sold a flat in Mumbai. As per Indian tax laws, the buyer of the property is required to deduct TDS on the sale of immovable property. However, your client is seeking a way to avoid or reduce this deduction by obtaining a NIL or lower deduction certificate from the Income Tax Department.
### **2. Capital Gains and Taxation**
Since the sale occurred in FY 2012-13, the capital gains would be classified as Long-Term Capital Gains (LTCG), given the property was held for more than 24 months. For LTCG:
- **Tax Rate:** The LTCG on the sale of property is taxed at 20% with indexation benefits.
- **Exemptions:** Section 54 of the Income Tax Act provides an exemption if the capital gains are invested in a new residential property.
### **3. Process to Obtain NIL or Lower Deduction Certificate**
#### **A. Apply for Lower/NIL Deduction Certificate**
**1. **Application Form:**
- **Form 13**: To apply for a lower or NIL deduction certificate, your client needs to submit Form 13 to the Income Tax Department.
**2. **Procedure:**
- **Online Submission:** Form 13 can be submitted online via the Income Tax Department’s e-filing portal. Alternatively, it can be submitted in physical form at the local Assessing Officer’s office.
- **Documents Required:**
- Copy of PAN card.
- Copy of the sale deed.
- Proof of capital gains, if any, and documents related to the new property to be purchased (if applicable).
- Proof of investment in Capital Gains Account Scheme (CGAS) if applicable.
**3. **Supporting Documents:**
- Sale agreement or sale deed.
- Proof of capital gains and any investments made under Sections 54, 54EC, or 54F.
- Copy of the return filed for the relevant financial year.
**4. **Processing Time:**
- The issuance of the certificate may take a few weeks. Your client should apply well in advance of the transaction to ensure timely receipt of the certificate.
#### **B. **Capital Gains Deposit Scheme Account (CGAS)**
If your client is planning to reinvest the proceeds into a new residential property:
**1. **Open CGAS Account:**
- The sale proceeds should be deposited into a Capital Gains Deposit Scheme (CGAS) account with a nationalized bank. This account helps in claiming exemptions under Section 54.
**2. **Procedure:**
- **Visit a Bank:** Open a CGAS account with a designated bank.
- **Deposit Proceeds:** Deposit the sale proceeds in this account.
- **Reinvestment:** Reinvest the funds in a new residential property within the stipulated time frame (generally 2 years from the date of sale).
**3. **Documentation:**
- Proof of deposit in CGAS.
- Proof of reinvestment into a new residential property.
### **4. **Sections and Relevant Laws**
- **Section 194-IA:** TDS on transfer of immovable property.
- **Section 54:** Exemption on reinvestment in residential property.
- **Section 54EC:** Exemption on reinvestment in specified bonds.
- **Section 54F:** Exemption on reinvestment of sale proceeds in a residential property, if the asset sold was not a residential property.
### **5. **Action Steps**
1. **Obtain Form 13:** Apply for a lower or NIL TDS certificate by filling Form 13. Ensure that the application is supported with all necessary documents.
2. **Open a CGAS Account:** Deposit the sale proceeds into the CGAS to claim exemptions under Section 54.
3. **Reinvestment:** Ensure reinvestment into a new residential property within the prescribed period to claim exemptions.
4. **Submit Documents:** If the certificate is obtained, submit it to the buyer to ensure that TDS is not deducted or is deducted at a lower rate.
### **Summary**
Your client should:
- Apply for a NIL or lower deduction certificate using Form 13.
- Open and deposit funds into a Capital Gains Deposit Scheme (CGAS) account if planning to claim exemptions under Section 54.
- Provide the relevant documents and proofs to support the application.
This process will help in managing the TDS on the sale proceeds and ensure that the capital gains are adequately addressed under the applicable tax laws.
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