Nri Property Tax In India, Tds For Sale Of Property, Property Tax Filing For Nri, Nri Selling or Buying Property Land In India

TDS on Sale of Property By NRI

TDS on purchase a property from NRI- TDS is applicable to be deducted only on capital gains not on property sale price. It becomes very tricky when an NRI sells a property in India’s top metro cities including Hyderabad, Bangalore, Pune, Chennai, Mumbai, Noida, Delhi, and Gurgaon- Main thing to be noted here for a buyer is TDS amount.

TDS Rate on Purchase of Property from NRI

In such TDS rate deduction, A TDS under Section 195 is required to be deducted on capital gains. There are two types of capital gains a) long term b) short term

For both kinds of capital gains, there are following TDS rates applicable for both long term and short term gains. A total of 20% TDS is applicable for a property held for more than 2-3 years (long term capital gains) while TDS is calculated as per income rate slabs of the seller if a property is being held for a less of 2 years.

You can check out current TDS rates for the long term and short term capital gains effective from 

Particulars	Less Than 50 Lacs	50 Lacs to 1 Crore	More than 1 Crore
Long Term Capital Gain Taxes	20%	20%	20%
Surcharge	Nil	10% of above	15% of above
Total Tax (Inclusive Surcharge)	20%	22%	23%
Health and Education Cess	4% of above	4% of above	4% of above
Total TDS(including Surcharge & Cess)	20.8%	22.88%	23.92%

 

Particulars	Rs. 2 Crore to 5 Crore	Above 5 Crore
Long Term Capital Gains	20%	20%
Surcharge	25% of Above	37% of Above
Total Tax (including Surcharge)	25%	27.40%
Health and Ed	4% of Above	4% of Above
Applicable Total TDS Rate	26%	28.496%

What are Different TDS Rules on Purchase of Property from NRI?

Today Nri people tend to sell their property acquired in India when they get citizenship in a foreign country. One thing becomes very essential for them is the sale of house land and related property tax filing proceedings. As most of them don’t like to give a burden of property taxation on their relatives, closures, family members- In such cases they manage all tax implications applied on selling or buying a property. Because most of them don’t have such rental income related income plan from such property resources inherited from their ancestors in India. Consequently, each of them decides to sell to others for taking a new step for investments.

 

In India, the municipal corporation of a specific region evaluates and imposes the property tax once a year or semi-annually. The property tax amount is based on the area, building, property size, and so forth. The collected tax amount is principally used for public services like restoring roads, building schools, public buildings, and sanitation.

 

There is a bit of confusion in payable tax amount for NRIs owning their property in India. If they want to sell it a person, there are certain tax assets which are required to be followed according to a central government. We will remove every confusion in a while determining total TDS applicable, Capital Gain Tax deductions and exemptions. NRI Property tax in India is a must for NRIs who want to sell the property either to a resident or non-resident Indian. The tax that would payable would be dependable on the type of the gain whether it is short term or long term. Each such condition each purchaser or seller must need to update about income tax regulations act related to capital gain taxes and related exemptions norms. For example- if an NRI sells a house after 3 years incurring capital gains and makes an investment within 6 months then he/she is liable to exempt the capital gain taxes.

 

When a property is sold after 2 years of purchasing(reduced from 3 years to years in budget 2017) then long term tax would be applied otherwise it exists under short term gain tax. So this article gives the proper way to file tax amount in India. Also, NRI might file tax even if the property is inherited. One thing to be noted here is which date transfer that one to his/her account.

 

The profit you make from selling such land or house will be added in your total income and could be treated as taxable according to different income tax slabs you fall under. Check out table representing such income tax slabs in India.

 

Types of lands which fall under Property Tax: In India, Property Tax is levied to the real estate property including land, buildings, flats etc. Check out all properties which are levied to tax under India Income tax laws.

• Residential house(self-occupied or let-out)
• Office building
• Factory Building
• Flats
• Shops

Non-Resident Indian pay the tax only on Income earned from Indian property, land, agriculture or houses. The tax year in India starts from 1st April 2019 and ends at 31 March 2020. So today we will discuss each type of tax levied on NRIs.

 

Property Tax Filing online:

 

NRIWAY’s Property Tax Management service is a complete solution to provide property tax management. We concentrate on delivering personalized services intended to solve the property tax issues all over the country.

Income	Income Tax Rate For Men (below the age of 60) & HUF	Income Tax Rate For Women (below the age of 60)
x< 2.5 Lakh	Nil	Nil
2.5 Lakh	10% of the amount that exceeds Rs. 2.5 lakh	10% of x that exceeds Rs. 2.5 lakh
5 Lakh	20% of the amount that exceeds Rs. 5 lakh	20% of the x that exceeds Rs. 5 lakh
x>10 Lakh	30% of the amount that exceeds Rs. 10 lakh	30% of the amount that exceeds Rs. 10 lakh

 

NRIWAY’s Property Tax Management service is adaptable based on your particular conditions and incorporates:

• Assessment Notice

• Appeals Management

• Property Tax Bill Collection

• Database Entry

• Database Maintenance

• Property Tax Planning and Research

• Assessment Review

• Property Tax Bill Payment

• Audit Management

• Property Tax Compliance

• Forecasting

We also offer real-time access to your property tax information by means of our property tax management services in India. It takes account of reporting features that can be personalized as required. Allow our group of proficient property tax experts’ partner with you to alleviate your tax management burden.

Education Cess: An education cess of 3% is levied on the total income tax liability.

Rental Income Tax: Income earned from leasing properties, land, buildings in India is subject to 15% of taxation, levied on gross rent collected.

Wealth Tax: Net wealth tax is levied at 1% on a taxpayer´s net assets if it exceeds INR3 million (US$44,118).

How to pay Property Tax: In India, Municipal taxes must be file online either on state government or municipal authority portals. These areas of paying tax online have eliminated the cumbersome process of tax payment. A 'Khata Number' or 'Property Tax Number' is associated with each property to be identified uniquely. A property tax payment can be attempted via offline channel by visiting Municipal corporation offices or to the banks partnered with those municipal authorities as well.

Different municipals incorporate separate systems for tax payment and assess the due tax.

1. Annual Rental Value or Rate- Able Value(ARV): Through ARV systems of property tax payment, a gross annual amount of rent is fixed for rental property. Till now Hyderabad, Chennai follow this system to pay tax.

• Monthly rental value = Plinth Area x Basic Rate per sq ft
• Annual rental value = Monthly rental value x  12 – 10%.

1. Capital Value System: CVS is where the tax is applied to the market value of a property. This market value is fixed by the related stamp duty of the department. For example-The Brihanmumbai Municipal Corporation switched to this system and started 'ready recknower' to do the compilation of pricing of property value across the cities. Consider property tax calculation in Chennai- The main thing is to arrive at an annual value of a property. This can be achieved by calculating the monthly rental value.       

• Capital value = Market value of property x total carpet area x weight for construction type x weight for age of a building. 

• Property tax = Capital value of property (X) current property tax (X) weight for user category

1. Unit Area System: Under the UAS system, property tax is applicable at per unit carpet pricing. In New Delhi, Bangalore, Kolkata, Hyderabad, Patna and Ahmedabad property tax is calculated by fixing a price for per unit value of the area.  Use the formula-Annual Value = Covered Area x Base Unit Area Value x Multiplicative Factors.

How much time does it take for the property tax refund after the sale of the property?

If the property tax department accepts your appropriately completed return in addition to all the correct and complete enclosures as it should be, you can look forward to getting your property tax refund: by mid-August if you are a resident or mobile home holder, and your file property tax refund by June 15, or within 60 days after you file the refund, whichever is later.

How NRI's Can Lower Tds On Property Sale?

In order to save capital gain taxes by an NRI, he can reinvest again after buying a new property. NRI can apply for a tax exemption certificate from Income Tax Dept. under section 195 of Income Tax Act, 1961. Under three conditions you may claim TDS refund to lower its total value.

TDS Refund by NRIs:

In order to minimize the TDS after buying a property from NRI one must understand below three points:

1. If an NRI’s total income in India is less than the basic exemption limit of 2.5 Lacs, he/she can apply for TDS waiver with Income Tax officer under whose jurisdiction your case will fall.

2. If your country of residence has agreed upon Double Taxation Avoidance Agreements (DTAA) with the Indian government then DTAA helps a tax payer for freeing his tax amount in both countries. NRI need to submit a tax residency certification from the country of his residence.

3. You can either buy another house in India or invest in capital gains bonds u/c 54EC. You should submit an affidavit stating that you will invest the capital gain amount in capital gain bonds.

Is TDS applicable for NRI while selling property in India?

• According to the Indian Income Tax Act, every time a resident buys any property from a non-resident, he has to subtract income tax (TDS) and shell out the balance amount to the property vendor.

• He has to subtract 20% of the sale consideration as the tax before making the net compensation to the broker.

• Initially, property purchaser is supposed to obtain TAN under section 203A of the Income Tax Act, 1961 before taking away TDS. TAN can be acquired by applying to fill up the Form 49B.

• TDS must be taken away at the time of paying the sum to the NRI. The info about the TDS being subtracted and the rate at which it was deducted must be cited in the sale deed between the NRI property seller and the property buyer.

• The TDS deducted by the property purchaser must be deposited via Form number or challan for TDS payment. It has to be done on or before the 7th of the following month in which the TDS is deducted.

• You can deposit the TDS through banks that are certified by the government of India or the Income Tax Department to round up Direct Taxes. The total deposit has to be made by the property buyer.

 

What is the property tax rate on the sale of property for NRI in India?

When NRI possesses the property in India, the tax implications, as well as an exemption, are identical to those of a resident Indian. On the other hand, the NRI must turn out all the papers for asserting deductions. An NRI is required to make an up to date decision to avail all the benefits accessible to NRIs.

 

Is TDS on property applicable for NRI?

• As reported by the Indian Income Tax Act, each time a resident buys any property from a non-resident, he needs to deduct income tax (TDS) and shell out the balance amount to the broker.
• He needs to deduct 20% of the sale consideration as income tax before paying the net sum to the seller.
• First of all, the purchaser should acquire TAN under section 203A of the Income Tax Act, 1961 before deducting any TDS. TAN can be obtained by filling up the Form 49B.
• TDS have to be abstracted at the time of paying the sum to the NRI. The info about the TDS being deducted and the rate at which it was deducted must be stated in the sale deed that’s made between the NRI seller and the purchaser.
• The TDS deducted by the purchaser is supposed to be deposited using Form number or challan for TDS payment. This has to be done on or before the 7th of the following month in which the TDS is deducted.
• You can deposit the TDS through banks that are certified by the Income Tax Department government of India to collect Direct Taxes. The deposit needs to be made by the purchaser.

How much TDS to be paid on the sale of NRI property in India?

20%

What are Taxation rules for NRI property buyers?

After the NRI gets hold of a piece of immovable property, following tax provisions would be applicable for an NRI to be aware of the taxability of income earned from such investments.

• Applicability of DTAA
• Calculation of capital gains
• Calculation of rental income
• Withholding of tax
• Exemptions from capital gains
• Liability to file a return
• Deductions allowable

 

Which ITR form is to be used by NRI for Property Tax Filing?

• ITR -1

Mostly used for salary earnings, other source earnings, house property earnings that are up to Rupees 50 Lakhs – just for Individual Resident Assessees.

• ITR-2

It is again for salary income, other source earnings that go over Rupees 50 Lakhs, house property revenue (for more than one house) in addition to capital gains and Individual Resident or Non- Resident Assessees in addition to HUF Assessees.

• ITR-3

Business or profession income in addition to any other earnings like salary income, other income sources, capital gains, and house property is a necessity for filling this form.

 

How Can NRI’S File Property Tax Returns in India?

No matter if you are NRI or not, every person has got to file a Property Tax Return.

 

Can NRI use ITR 1 for Property Tax Filing in India?

For the most part, ITR -1 is used for salary income, other source earnings, house property income that’s up to Rupees 50 Lakhs for resident assessees.

 

How NRI’s can lower TDS on Property Sale?

You can apply for Lower Tax Deduction or Nil Tax Deduction with Income Tax Assessing Office as NRI Seller. In case, you are planning to re-invest capital gain then you can apply for tax exemption certificate as well. In consonance with an assessment by Income Tax Department, an official document will be issued to non Resident Indian seller for a property deal.

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