Whether tax is liable to be deducted at source from sale consideration payable to a non-resident transfer or who sells immovable property?
Section 194-IA of the Income Tax Act is not applicable when the seller is a non-resident. However, Tax is required to be deducted from sale consideration as per section 195 of the Act.
Tax should be deducted at rates prescribed by the Finance Act of the relevant years or where there exists DTAA u/s 90 with payee’s country, then at such rates specified in the DTAA whichever is benefitial to payee.
- Where the payer has obtained from the AO working of the portion of the sum chargeable under the Act, tax should be deducted only on the portion so determined [Section 195(2)].
- Deduction should not be made or should be made at lower rate where a certificate to that effect has been obtained u/s 197 by the payee from the AO.
- In cases notified by CBDT u/s 195(5), where the payee has obtained certificate from AO u/s 195(3), no TDS shall be applicable. [Refer Rule 29B and forms 15C to 15E]