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Tds on property purchase from nri

r d medane (proprietor) (85 Points)

17 August 2016

Mr. A wants to buy property from Mr. B who is NRI staying in Dubai. Consideration for the flat is Rs. 2.00 crore TDS is to be deducted on payment of purchase price is 20% for NRI while for other it is 1%. NRI sellers cost of acquisition is 1.40 crore PLUS inflation index is 60 lacs. Sale price is Rs. 2.00 crore. There is no capital gain. Even 1% deducted i.e Rs. 2 Lacs will have to be claimed as refund. What is the Remedy for the buyer & seller.

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2 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (184713 Points)
Replied 17 August 2016

NRI Seller can apply for Nil Tax Deduction or Lower Tax Deduction with Income Tax Assessing Office. Even Purchaser can apply for tax exemption certificate. Based on assessment by Income Tax Department, certificate will be issued to NRI seller for property sale. In this case, buyer will not deduct TDS u/s 195 on sale consideration value.

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Abhinav (CA) (397 Points)
Replied 25 January 2017

As pointed out by Mr. Rambhia, there is a good chance in this case that a lower TDS certificate is issued by the AO. If not, then as a buyer, you are responsible to deduct TDS at applicable rate u/s 195 on FULL sale consideration and not any reduced amount.