TDS on sale of immovable property by NRIs:

 

Who is treated as an NRI?

For income-tax purposes, residential status is determined year-wise under sections 6 of the Income-tax Act, 1961.

If the seller is a Non-Resident or RNOR in the year of sale, the provisions below apply.

Taxability of Capital Gains in India

Income from transfer of immovable property situated in India is always taxable in India, irrespective of residential status.

Who deducts TDS?

Buyer of the property is responsible to deduct TDS.

Rate of TDS for NRIs

With effect from transfers made on or after 23 July 2024, long-term capital gains arising to non-residents from the transfer of land or building situated in India are governed by section 112(1)(c) as amended by the Finance Act, 2024.

Such gains are taxable at the rate of twelve and a half per cent without the benefit of indexation. The tax so computed is subject to surcharge and health and education cess.

However, the surcharge applicable to long-term capital gains is capped at fifteen per cent, irrespective of the total income of the non-resident.

STCG on immovable property is taxable under normal provisions.

Lower deduction certificate:

Under Section 197(1), where the Assessing Officer is satisfied that the total income of the recipient justifies deduction of tax at a lower rate or nil rate, he may issue a certificate to that effect. Lower or nil deduction under section 197 allows TDS to be aligned with the actual capital gains tax liability of the NRI selle