9330560978, 7604033348,

NRI selling the property in India should take advantage of lower TDS permission

NRI selling the property in India should take advantage of lower TDS permission

Our Flat or house in India is considered as a Capital asset and when we sell this capital asset we need to pay capital gains Tax. If the property is sold within 3 years of purchase, then the assessee incurs short term capital gains and if the property was sold after 3 years then its long term capital gains.

1.       Rate of Income Tax in case of short term capital gains is 15%. And the gain is calculated by subtracting the Purchase price and related and incidental expenses from the sales value.

2.       Rate of Income Tax in case of Long Term capital gains is 10% without indexation & 20% with indexation.

Indexation is a concept related to present value of money.  Value of Rs. 100/- today is more than the value of Rs. 100/- after one year as there is inflation in our country. So every year the Income Tax department comes out with an indexation chart. Eg. The indexation of FY 2004-05 is 480 and that of 2014-15 is 1024. Therefore if an asset was purchased for Rs. 100/- in the FY 2004-05, its relevant cost value for the FY 2014-15 is 100(1024/480) = Rs. 213/- which will get deducted from the sales value to  compute capital gains.

The rate of Income Tax on capital gains is same in case of resident Indians as well as Non-resident Indians (NRI). The difference lies in the rate of TDS to be deducted by the buyer.

If the seller is a resident Indian and the value of the property is more than Rs. 50 lakhs, then the applicable TDS section will be Sec 194IA and buyer will deduct his TDS @ 1% and issue him the TDS certificate in Form 16B.

Whereas, if the seller of the property is a NRI, then sec 195 will be applicable and the rate of TDS would be 20.6% and if the value of the property is more than Rs. 1cr, then the rate of TDS would be 22.66%.

Many a times it has been seen that the amount of TDS exceeds the calculated Capital Gains which becomes the good reason for the deal breaker.

Good news is that, the NRI can apply to his Income Tax assessing officer for a Certificate of non deduction or lower deduction of TDS by requesting him that the TDS should only be deducted on the calculated Capital Gains, if any and not on the Sales amount. The NRI will require to submit his sale and purchase deed copies, Capital Gains calculation, PAN card, Income tax return of previous years if any, bank statements  and other related documents to assessing officer with the request letter.

Another good news is that the NRI can save this TDS as well  by:-

a)      Investing this Long Term capital gains into another house property within 2 years

b)      Invest in REC & NHAI bonds which has a lock-in period of 3 years

By doing this, the NRI will be exempt from Income Tax in India and needs to apply to the assessing officer for Tax exemption certificate u/s 195.

NRI can now remit this money back to his country upto $1 million per year by taking a certificate from his Chartered Accountant in Form 15CB and then filing Form 15CA. Alternatively, he can keep the money in Indian NRO account is he doesn’t want to repatriate it abroad.


Contact us at or +91 9330560978 if you want us to represent your case to the Income Tax department. Thank You!

Go Back