TDS Implication On Property Sale For Resident And Non-Resident Indian

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Sale of a property in India with gains makes you realize capital gains that can either be short or long term capital gains depending upon the holding period of the capital asset. So, if a residential premise is sold, after a period of 2 years (in budget 2017 reduced from 3 to 2 years) from the date of owning it- it accrues long term capital gains. Else, in the other situation when the premise is held for 2 years or less then there is a short term capital gain.

TDS Implication On Property Sale For Resident And Non-Resident Indian

Capital Gains Tax and TDS implication for NRIs

If the NRI sells his property in India then he will be liable to pay tax on capital gains. LTCG are taxed at the rate of 20% while short term capital gains are taxed as per the applicable income tax slab rate of the NRI based on his total income which is taxable in India.

In case of inheritance similar tax implications apply

In case the property has been inherited then for knowing whether the said gains will be short-term or long-term in nature, you need to account for the date of purchase by the original owner. The property cost in such a case will be the cost to the previous or original owner.

How much TDS is deductible for NRIs?

In case the property is being sold after a holding period of 2 years from the date of purchase by the NRI then the buyer is liable to deduct TDS @ 20%. Else if the held property is sold before 2 years then a TDS deduction @ 30% is to be charged.
In case of a resident Indian, TDS implication is 1 % on sale proceeds.

Important points to note for NRIs

NRIs may need to report such gains realized in India by selling a property in their country of residence.

If NRIs do not want tax deduction at source and wish to invest realized capital gains they need to produce Nil TDS certificate for the same from the income tax dept.

NRIs can repatriate a maximum of $1 million in a financial year and for this purpose a relevant certificate from Chartered Accountant has to be submitted.

Also, you must file an income tax return to report such transactions, gains realized and capital gains exemption claimed irrespective of whether or not any tax is payable by you.

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