TDS Process for NRI Property Sellers in India

TDS Process for NRI Property Sellers in India

The law requires Indian NRIs to understand that any payment made to them for property ownership necessitates Tax Deducted at Source (TDS) from the buyer. The tax law of India requires compliance through this detailed process which protects both parties from getting penalized. The following explanation provides a simplified explanation of the TDS process in an engaging manner.

 Why TDS is Important for NRI Property Sales

The payment made to NRI property buyers must have TDS applied regardless of the transaction value since this rule differs from resident-to-resident property sales that need TDS above ₹50 lakh only. NRIs fall under Section 195 of the Income Tax Act which determines their tax obligations.

Who Handles the TDS? The TDS responsibility rests with the buyer since they must both deduct and transfer the tax on sale proceeds to the government. The process requires buyers to show proper awareness about TDS compliance or else both parties risk facing penalties as well as delayed payments. 📆 Step-by-Step TDS Process 1. Determine Applicable TDS Rate • Long-term capital gains (holding > 2 years): o Before July 2024: 20% + surcharge + cess (~22.88%) o On or after July 23, 2024: 12.5% + surcharge + cess (~14.3%) • Short-term capital gains (holding ≤ 2 years): 30% + surcharge + cess (approx. 31.2%) 2. Buyer Obtains TAN (Tax Account Number) • Filing TDS returns requires this document as a mandatory requirement. PAN is not enough. 3. Deposit TDS via Challan ITNS 281 The NSDL portal enables buyers to submit their Section 195 TDS through its platform. The payment schedule requires completion before the seventh day of the upcoming month. 4. File Quarterly TDS Return (Form 27Q) • Submit details of the deduction online. The July 31, 2025 deadline serves as the filing date for deductions made in March 2025. 5. Provide Form 16A to Seller The seller needs this certificate to prove TDS deduction since it serves as their proof of tax credit eligibility. 🔎 Frequently Asked Questions (FAQs)

Q: Does the seller receive instant visibility of TDS details in Form 26AS after payment execution? No. The record appears after the buyer submits Form 27Q. A challan receipt serves as a valid document for TDS credit only when used in isolation. Unfortunately, no. The credit allowance occurs only when Form 26AS contains the information.

Q: What happens to TDS payments after a sale gets canceled? The buyer needs to use the TRACES portal to request a refund after submitting a correction statement through the platform.

Q: Does the NRI have the right to demand a reduced TDS amount? Yes. An NRI can obtain a Section 197 Lower Deduction Certificate prior to sale execution.

Q: Are there penalties for late filing? Yes. Delaying Form 27Q submission results in a daily penalty of ₹200 while unpaid amounts attract additional interest payments.

💸 Best Practices for Smooth Transactions

NRI sellers should maintain regular communication with buyers to verify timely completion of necessary filings.

The PAN and TAN documents together with sale deed and Form 16A and Challan copy and Form 27Q acknowledgment must be available for the process.

Applicants who request TDS exemption or reduced rates before the sale can prevent unnecessary deduction amounts.

A tax advisor should be consulted to manage complications and accelerate refund processing.

Final Thoughts

The TDS process for NRI property sales becomes manageable through proper information sharing and coordinated efforts. A successful outcome requires both the buyer to know their duties and the seller to remain proactive throughout the process. The timely credit of TDS in Form 26AS alongside expedited refund processing becomes possible through this process.

Need Help? Contact: Shubham Goyal ✉️ Email: casgpj@gmail.com 📞 Phone: 8171582583