TDS on Sale of Property by NRI

If you’re an American NRI (Non-Resident Indian) with property back in India, you might be pondering the idea of selling it off.

Whether it’s that old family home or an investment you made a few years ago, selling property from across the seas can feel a bit daunting, especially when India’s tax maze comes into play.

🏠 1. First Things First: What’s TDS?

Imagine you’re selling your property. Before you receive your payment, a slice of it gets deducted and paid to the Indian government as tax.

This slice is what’s known as Tax Deducted at Source (TDS). Basically, it’s a way to ensure you pay your due taxes, even if you’re miles away!

📉 2. How Much Will Be Deducted?

Generally, it’s 20% (plus a few extras called cess and surcharges) of the property’s sale value, if it’s over ₹50 lakh. So, if you’re selling an upscale apartment in Mumbai, be ready for a significant chunk to be set aside.

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But here’s a twist: this deduction is from the gross sale amount, not your profit!

💡 3. Think 20% is Too High? There’s a Way Out!

Yup, you heard right. If you believe the 20% slice overshadows your actual tax due on the profit, you can ask the Indian tax authorities for a lower rate.

Just fill out a Form 13, explain your side, and if they’re convinced, you’ll get a go-ahead to reduce that TDS rate.

📜 4. Got No PAN (Permanent Account Number)?

A PAN is like the Social Security Number for tax matters in India. If you’ve misplaced yours or never got one, the TDS rate can jump to a whopping 30%.

So, it’s a good idea to keep that PAN card handy!

💳 5. A Quick Heads-Up to Your Buyer!

Once they’ve deducted the TDS, your buyer needs to deposit it with the Indian government. They’ll use a form named 26QB for this. Afterward, they should hand you a TDS certificate (Form 16B).

It’s like a receipt, showing the taxes paid on your behalf.

🚨 6. The Dreaded ‘What Ifs’

Missed deadlines or any slip-ups in this TDS game can lead to extra interest or even penalties.

So, if your buyer’s new to this, you might want to give them a friendly nudge or suggest they get professional help.

🌟 Conclusion

Navigating property sales in India from the US isn’t just about finding the right buyer or getting the best price.

The tax trail is crucial. But with a bit of knowledge and perhaps some expert guidance, it can be a breeze.

And who knows, with the money you get, you might just be planning your next big American dream!

🤔 FAQs on TDS When Selling Property in India:

Q1: I’m an NRI. Do I have to pay taxes in both the US and India when selling property?

A: When you sell property in India, you’ll pay TDS there. However, in the US, you might have to declare this income. The good news? The US-India Double Tax Avoidance Agreement means you won’t be double-taxed. But always consult a tax expert to get things crystal clear.

Q2: How can I get a PAN if I don’t have one?

A: You can apply online through the NSDL website. They have a specific form for foreign citizens, known as ‘Form 49AA’. It’s not too complex, but having it ensures you don’t pay extra in TDS.

Q3: Can I ask a family member in India to handle the TDS details for me?

A: Absolutely! Many NRIs provide a Power of Attorney (PoA) to someone they trust in India to handle property sales and the associated tax processes. Just ensure all the legalities are correctly in place.

Q4: What if my property’s value is below ₹50 lakh?

A: If the sale price is below ₹50 lakh, the standard 20% TDS doesn’t apply. But remember, it’s always good to check current rules or speak with a tax consultant for any changes.

Q5: How soon does the TDS need to be deposited with the Indian government?

A: Your buyer should deposit the TDS within 30 days from the end of the month in which the TDS was deducted. So, if they deducted it in January, they have until the end of February to deposit it.

Q6: I’ve sold the property. Can I send the money to the US?

A: Yes, post the TDS and any other tax dues, you can repatriate the money to the US. However, there are some limits and procedures to follow. It’s best to check with an expert or bank that’s familiar with NRI transactions.


Friendly reminder: Always keep a tab on official sources or have a chat with a tax consultant to make sure you’re up-to-date with all the rules and regulations!

Categories NRI

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