TDS on payment made to NRI
This query is : Resolved
13 September 2007
Hi,
My client is an Individual having only Income from Salary and Interest from Banks. My client wishes to purchase vacant land wroth of Rs. 25, 00,000/-from Non Resident Indian who is well settled in USA
Now my question is TDS provisions are attract to my client. He has to deduct TDS @ 20% U/s 195 on sale consideration.
Kindly clarify
Regards
K.K.VISWESWARA RAO
My client is an Individual having only Income from Salary and Interest from Banks. My client wishes to purchase vacant land wroth of Rs. 25, 00,000/-from Non Resident Indian who is well settled in USA
Now my question is TDS provisions are attract to my client. He has to deduct TDS @ 20% U/s 195 on sale consideration.
Kindly clarify
Regards
K.K.VISWESWARA RAO
13 September 2007
1
13 September 2007
I THINK U ARE TALKING ABOUT CAPITAL GAIN TAX. CAPITAL GAIN TAX @ 20 % IS APPLICABLE & IT IS NOT CONFERRED BY SEC 195
13 September 2007
Hello Mr Vissu,
Please refer this.
In case it is long term asset, there is clear cut and separate rate given u/s 112 of the I T Ac. which is as under:
"112(1)(c) in the case of a non-resident (not being a company) or a foreign company,
(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income ; and
(ii) the amount of income-tax calculated on such long-term capital gains at the rate of twenty per cent ;"
In effect waht it means is that the tax rate on long term capital gains is 20%.However, important point to note that in case the the seller of the property is non resident at the time of sale , the buyer may have to deduct the tax at source u/s 195 of the I T Act which is at much higher rate than normal long term capital gains tax rate @ 20%.
Please refer this.
In case it is long term asset, there is clear cut and separate rate given u/s 112 of the I T Ac. which is as under:
"112(1)(c) in the case of a non-resident (not being a company) or a foreign company,
(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income ; and
(ii) the amount of income-tax calculated on such long-term capital gains at the rate of twenty per cent ;"
In effect waht it means is that the tax rate on long term capital gains is 20%.However, important point to note that in case the the seller of the property is non resident at the time of sale , the buyer may have to deduct the tax at source u/s 195 of the I T Act which is at much higher rate than normal long term capital gains tax rate @ 20%.
13 September 2007
Mr.Gul's analysis is right.
But the main thing is that Buyer in this case is an individual.
An individual is not supposed to withhold tax.
Plz clarify in this regard.
But the main thing is that Buyer in this case is an individual.
An individual is not supposed to withhold tax.
Plz clarify in this regard.
13 September 2007
Thanks Mr Mani for the comment.
you are right the status of the person is INDIVIDUAL - NRI but does the following para's answer your quary.
All payments to non-residents, (including to non-resident Indians) other than salaries, which are chargeable to tax under the Act, 1961, are covered under Sec. 195. TDS on salary paid to non-residents employees are governed by section 192 and not section 195. In other words it is only the chargeable income hidden or embedded in the sums (other than salaries) paid to a non-resident that is liable for TDS u/s 195 (Transmission Corpn. of A.P. Ltd. vs. CIT (1999) 105 Taxman 742 / 239 ITR 587 (SC) read with CIT vs. Superintending Engineer (152 ITR 753(AP))
195. 27[(1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest 29[***] or any other sum chargeable under the provisions of this Act (not being income chargeable under the head “Salaries” 30[***]) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :
Plz guide
you are right the status of the person is INDIVIDUAL - NRI but does the following para's answer your quary.
All payments to non-residents, (including to non-resident Indians) other than salaries, which are chargeable to tax under the Act, 1961, are covered under Sec. 195. TDS on salary paid to non-residents employees are governed by section 192 and not section 195. In other words it is only the chargeable income hidden or embedded in the sums (other than salaries) paid to a non-resident that is liable for TDS u/s 195 (Transmission Corpn. of A.P. Ltd. vs. CIT (1999) 105 Taxman 742 / 239 ITR 587 (SC) read with CIT vs. Superintending Engineer (152 ITR 753(AP))
195. 27[(1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest 29[***] or any other sum chargeable under the provisions of this Act (not being income chargeable under the head “Salaries” 30[***]) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :
Plz guide
13 September 2007
Liable to deduct TDS at 33.99/22.66 depending upon whether it is a short /Long Term capital gain.
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