The Income Tax Department may keep an eye on those buyers who have brought property from non-resident and have failed to deduct/deposit TDS on the purchase of property from a non-resident.
TDS part with respect to a non-resident is complex and should be complied with the help of an expert who is well aware of the compliances that have to be done before buying a property from non Resident.
The primary responsibility is imposed on the buyer to deduct the TDS at an appropriate rate and pay to the government. Omission with respect to TDS intentionally or unintentionally, the buyer will have to face the consequences of penalty, interest, and TDS.
There are various questions that arise in the mind of buyer and compliances that have to be done with respect to buying a property from a non-resident.
It is the primary responsibility of the buyer to deduct the TDS at an appropriate rate and pay to the government. Any non-compliance will lead the receiving the notice from the Income Tax department which in turn attracts interest and penalty for non-filing of TDS return.
No. TDS @ 1% is applicable for the buyer who is buying a property from a resident seller and having a value of the property more than Rs.50 Lakhs.
Yes. Section 194-IA is not applicable when you’re buying a property from a non-resident. The TDS compliances have to be done as per Section 195 of the Income Tax Act which has no threshold limit.
Yes, when being a buyer purchase a property from a nonresident the transaction is covered u/s 195 of Income Tax Act and for payment of TDS TAN of a buyer is mandatory without which the buyer will not be able to make payment of TDS.
Yes. NRI can apply for a lower TDS deduction certificate from Jurisdictional Assessing Officer in Income Tax department for allowing the residential buyer to deduct tax at a rate lower than TDS Rates as mentioned under section 195.
The TDS has to be paid on or before the 7th working day of next month failing which will attract interest.
TDS has to be paid on or before the 7th working day of next month. The amount of TDS depends on whether the agreement is made or not. If the agreement is not yet made, TDS has to be deducted on the amount of advance paid. If the agreement is done, TDS shall be made on the entire amount of consideration.
Yes. The buyer has to mandatorily file the TDS return for the particular quarter in which TDS payment is done well before the due date to avoid the penalty for late filing of TDS return.
TDS for a resident shall be deducted @ 1% and for NRI @ 20.8% of the value in proportion of their holding. For example; a property equally and jointly owned by Mr. X (resident) and Mr. Y (NRI) is to be sold at Rs 80 lakh rupees, TDS shall be deducted @1% on Rs. 40 lakhs for MR. X and @ 20.8% on Rs 40 lakhs for Mr. Y.