Buying an
immovable property in India, from a Non Resident?
Here are
some important legal provisions of Income Tax Act, to be noted and taken care
of.
Your tax liability on a property sale will depend on how long you
have held it. If you are selling a property that you have owned for more than
two years, then it will attract long term capital gains tax. For a property
owned for less than two years, you must pay short term capital gains tax.
The tax rates are as
follows:
Long-term capital gains are taxed at 20%
Short-term capital gains are taxed as per your income slab
Capital gains is the difference between your acquisition price and
your sale price minus any expenses you may have incurred in making the sale
(brokerage, stamp duty, registration charges, etc.).
Tax deducted at source
(TDS)
When a resident buys property from a NRI, the TDS is governed by
the provisions of section 195of the Income Tax Act. So the Buyer must deduct
TDS @20%, if the property was held for more than two years and @30% if the
property is being sold within two years. The deduction must include TDS plus
surcharge, health and education cess. If the Resident buyer fails to deduct tax
or deducts at a lower rate, he will be answerable to the department. He may be
asked to remit the tax on a later stage.
TDS on transfer of immovable property by a Resident, is governed by
Section 194A which provides that and amount @ 1% shall be deducted by the buyer
of the property if the sale consideration of such non-agricultural land exceeds
Rs. 50 Lakhs.
TDS Rates for Long Term
Capital Gains, including surcharge and Cess.
Properties
valued less than INR 50 lakh: Total TDS is @ 20.8%
Properties valued between INR 50 lakh and INR 1 crore: Total TDS is @ 22.88%
Properties valued above INR 1 crore: Total TDS is @23.92%
With effect from FY 2018-19, the Finance Ministry has announced a
higher surcharge on properties valued above INR 2 crore. The applicable TDS
rates on transfer of immovable properties are 25% and 37% for properties valued
above INR 2 crore and INR 5 crore respectively.
Sir, relative can buy a property on behalf of NRI (value of property 35 lakhs)? whether there is any chances for notice with respect to sources?
ReplyDeleteAll transactions of immovable properties, above 30 Lakhs are covered under SFT, and mostly you may get a notice.
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