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Tax on Capital Gains for Non Residents

Ashu Gupta (Chartered Accountant) (40 Points)

14 May 2007

Hi All,

I am a new joinee in the CA Club. Its really nice & convienent that we can reach for our answers to a query through this chat room.

I want to know that is Sale Consideration received on sale of property in india by a non-resident is liable to TDS . Is there any relief to him as he will invest the amount further to save the tax under the head Capital Gains.

Help me out with this???????

Thanks
Ashu

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3 Replies

P S R V V Surya Rao (Chartered Accountant) (19 Points)
Replied 17 May 2007

Primarily u/s.195 the person making pament of any sum chargeable to tax is liable to make TDS. Hence it depends on whether it is liable to tax in India or not. Prima facie the CG arising from a property situated in India is liable for tax in India as the income accrues in India and in the case of a NR any Indian income is taxable. However this has to be examined vis-a-vis the provisions of the relevant DTAA. If it taxable as per DTAA as well, then the buyer has to make TDS. Further the department's view is that one has to approach them u/s.195(2) or (3) to determine the rate at which TDS is to be made.

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Vk Duggal (320 Points)
Replied 18 May 2007

As per provision of section 195 TDS is to be deducted on any payment to Non-resident which include capital gains also. You can find the TDS rate on capital gains in Income-tax Ready Reckneor of Taxmann both for short term and long term gains.