NRI LOWER TDS DEDUCTION CERTIFICATE ON SALE OF PROPERTY

Importance of NRI lower TDS certificate on sale of property:

• TDS on sale of assets including immovable property is 30% on short term assets and 20% on sale of long-term assets. A surcharge and cess of 4% are also applied over and above the mentioned TDS rates.
• So, TDS on immovable property (long term assets) would be:
  • 20%+ surcharge of 15% + cess 4% = 23.92%.
• If an NRI transacts a property in India then he/she is eligible for lower TDS certificate which leads to much less amount being blocked with the income tax department as TDS withheld,
• For example, if an NRI sells an immovable property for INR 2 crore in which the indexed cost of acquisition is INR 1.5 crores then the net long term gain for the person is INR 50 lakhs. According to section 195 the TDS applicable will be 23.92% of INR 2 crores which is INR 47.84 lakhs.
• But the actual tax liability with the certificate would be calculated at 20.8% of INR 50 lakhs (surcharge is not applicable on capital gain under INR 50 lakhs) will be INR 10.4 lakhs.
• So, the net savings of TDS will be of 37.44 lakhs which would have been locked with the Income Tax department without the NRI lower TDS deduction certificate,
• Save the excess amount from being locked and thus resulting in a loss of capital and interest, the NRI lower TDS deduction certificate needs to be applied for and obtained from the Income Tax Department at the earliest.

Services of Certificate for lower TDS deduction for NRIs provided at K M Gatecha & Co LLP:

• Evaluation of sale for lower TDS (determining NRI status and sale),
• Collection of Documents,
• Preparation of application,
• Filling and submitted form 13 under section 197,
• Application to TDS jurisdictional officer,
• Compliance to queries by TDS officer,
• Processing of TDS certificate,
• Approval of Senior Jurisdictional Officer,
• Issuance of certificate.

Documents required to be submitted along with application:

• ITR-V/Acknowledgement of filing Income Tax return for relevant financial years to be provided.
• Computation of Income for relevant financial years.
• Balance Sheet and Profit and Loss Account for relevant financial years with all Schedules/Annexures.
• Audit report in Form-3CD/3CA-3CB/10B (Whichever is applicable) for relevant financial years.
• Complete Chart showing all the payments made, the head of such expenses (e.g., contract payment, legal professional fees, etc.) and the section under which tax has been deducted by the applicant.

Other Documents required:

• Name as per PAN card,
• PAN card,
• Jurisdictional Assessing officer details,
• Details regarding Nature of business/income source,
• ITR for last 3 years and projected income for current year,
• Tax payment details for last 3 years,
• Details of tax which has already been deducted,
• Details of any outstanding demands by the Income tax department,
• TAN details, if applicable,
• Details of cumulative tax likely to be foregone by issue of certificate.

Pre-requisites other requirements for obtaining NRI lower TDS deductions certificate:

• Proceeds of sale must be deposited in an NRO account,
• Accurate calculate of TDS amount to be mentioned in Lower TDS certificate,
• Depositing of TDS under section 195 only,
• Timely filing of TDS return,
• Stamped copy of properly executed copy of sale deed to be obtained for tax compliances.