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TDS on Payment To NRI

Bapun Dasgupta (student) (133 Points)

04 March 2021

An individual who is now a NRI wants to sell his apartment in Kolkata for Rs. 1 Crore. How much T.D.S. will be made by the buyer of the apartment from payments made by him to the individual NRI and what will be the consequent net receipt of the NRI ? Thanks and regards.

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3 Replies

Naveen (student) (334 Points)
Replied 04 March 2021

Normally TDS to be deducted under Sec 195 @ 20% on capital gain earned by him, if the property is held by NRI for more than 2 years. If it is less than 2 years, TDS on capital gains as per his applicable slab rate.

But practically no one wants to disclose how much capital gain they are earning. In such cases, u can deduct TDS on full consideration of 1 crore to avoid penalties for you under non deduction of TDS and that NRI has to claim refund. But Try to explain the provision to that particular NRI that u need to deduct TDS on CG of NRI. If he is not willing to disclose, deduct TDS on full consideration of 1 crore. The second one is not exactly correct but that's what people do in practice.

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Bapun Dasgupta (student) (133 Points)
Replied 04 March 2021

Thank you very much for your kind and prompt reply.

Regards.

Neha sharma (-) (1257 Points)
Replied 17 April 2021

In such a case, you may also file an application to the Income Tax Officer for lowering of the TDS Rate. The income tax officer will review your application and on the basis of the documents submitted, will issue you a certificate for lower deduction of TDS.

This TDS Certificate is highly beneficial for NRI's as your amount does not get stuck with the income tax department and many NRI's opt for this certificate as it helps them reduce their TDS Liability.