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TDS from Capital gain account

22 September 2019

I had opened capital gains account in a bank and now I want to withdraw the amount as I am going to purchase a property. The seller is NRI. The value of property is 70 lacs. The capital gain amount deposited in the bank is 58 lacs. As the seller is NRI, it is my responsibility to deduct TDS of 20% under section 195 of IT act. My query is that can I ask my banker to pay TDS of 20% on 70 lacs from capital gain amount of 58 lacs and ask for TDS certificate? and what evidences banker asks me for this transaction to be completed?

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9 Replies

Kapadia Pravin (17259 Points)
Replied 23 September 2019

Sir have you got permission from AO to withdraw money from capital gain account scheme ?

Without permission from Assessing Officer AO , bank won't allow you to withdraw funds.

Once AO permission on hand , bank will issue cheque directly in favour of seller . At that time you request bank to ask for two cheques one for seller's name and second for TDS amount payment in the name of ________.

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Suresh Thiyagarajan (Student) (3986 Points)
Replied 23 September 2019

1. First to utilize the amount deposited in the Capital Gains Accounts Scheme(CGAS) you need to make an application to the bank specifying the purpose for which such amount will be utilized.
2. This amount should be utilized for that purpose within 60 days from the date of approval of the application. The banker may issue a cheque in the seller name for the amount requested for release. You may make a request to the bank to issue a separate cheque for Rs. 16,01,600 (22.88% including surcharge plus education cess) for the deposit of TDS in his PAN and balance cheque in the name of Mr. NR for Rs. 41,98,400.
3. However, after the above transaction, an application is to be made to the concerned A.O in form G for the closure of CGAS. Only if the AO is satisfied that all the amounts are invested according to the terms and conditions he may accept the application and issue a letter permitting the closure of CGAS.
Please correct me if the above solution has an alternative view.

prasada rao (7 Points)
Replied 23 September 2019

Please also clarify

1.Do I need to submit form 15ca and 15cb in this case to the bank?

2. To withdraw from capital gains, IT law says" no need to obtain prior permission from Assessing officer but for closure, it is required"

Suresh Thiyagarajan (Student) (3986 Points)
Replied 23 September 2019

1. Yes, if it is in the nature of Foreign currency remittance then the bank may ask for form 15CA and 15CB. This will contain the details of payment, the purpose for which the payment is made and TDS details.
2. Yes, you don’t need AO permission for withdrawing the amount, only for closure you need AO permission. That is what I also mentioned in my reply.

prasada rao (7 Points)
Replied 23 September 2019

That means, if the payment is made to NRO A/c or in the form of Demand Draft, 15CA and 15CB is not required, right?

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Kapadia Pravin (17259 Points)
Replied 23 September 2019

@ prasada
In addition to my above reply and reply by Shri Suresh ji,

I state that you are in a way closing the capital gain Account by withdrawing full 58 lakhs (towards property payment + TDS payment)

Leaving zero balance in CG account and then going for approval to jurisdictional AO for closure. it is amazing. I think bank will allow full withdrawal assuming closure on basis of AO's permission on Form G

Suresh Thiyagarajan (Student) (3986 Points)
Replied 24 September 2019

1. If the remittance is in foreign currency then form 15CA and Form 15CB is necessary. Bank would not process the remittances unless these two forms are submitted.
2. Form 15CA is a tax clearance certificate which needs to be obtained from IT and form 15CB is a certificate which needs to be signed by a CA.
3. But it is better to ensure from the bank you are remitting.
Please correct me if the above solution has an alternative view.

prasada rao (7 Points)
Replied 26 September 2019

I have approached the bank. He says as it is complete withdrawal, requires permission of ITO. Complete withdrawal is treated as closure. Hence ITO intervention is required. Is it so? but law says withdrawal is permitted. How to deal with? If I approach ITO, it takes months time. Any solution?

Kapadia Pravin (17259 Points)
Replied 27 September 2019

@ prasada Rao

The same thing I wrote in my above reply. Please read again. Same thing bank told you to do.

There is no way out but to obtain ITO permission / approval on Form G

Usually ITO takes 2-3 weeks provided your strong follow up.