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Purchase of immovable property from nri

Pawan Mittal (CA Final) (711 Points)

01 July 2014

Dear Experts

'Mr. A' (resident) wants to purchase an immovable property from an NRI.

What amount of TDS Mr. A should deduct as TDS and under which section?

Whether Mr. A is required to get TAN?

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1 Replies

Pankaj (Chartered Accountant) (118 Points)
Replied 01 July 2014

According to section 195 of the Income Tax Act, 1961, when any person is making payment for purchase of Capital Asset to a NRI and such payment would result in the taxable income (i.e. Capital Gain) of that NRI as per Income Tax Act then the person making such payment has to deduct the TDS at the rate of 20% of the total amount paid to that NRI.

Thus, Mr. A has to deduct TDS on the amount PAID to the seller who is a NRI.

As far as getting of TAN is in question, I think the only exception for not getting the TAN is under section 194IA (which is not applicable in case of NRI).