Type of Capital Gains | TDS should be done at |
|---|---|
| For Long Term Capital Gains | 20% + Cess |
| For Short Term Capital Gains | 30%* + Cess |
*No benefit of the slab should be allowed to NRI. Instead, the tax should be deducted at the highest slab rate of 30% presently. One of the key differences apart from the residential status and tax rate is that as per Section 195 of the Income Tax provisions, in this case, TDS needs to be done even if the amount in the transaction involved is less than Rs 50,00,000 (Fifty Lakhs). Whereas if the seller is Resident TDS liability under section 194IA is attracted only in case transaction amount is Rs 50,00,000 (Fifty Lakhs) or higher. In addition to the above, the buyer deducting tax under 194IA can deposit tax through Form 26QB. And is not mandatorily required to quote TAN (Tax Deduction and Collection Account Number). But as far as tax deduction by buyer making a purchase of property from NRI seller is concerned it is required to quote TAN compulsorily. We can summarise the discussion done above as under
Seller | Resident | Non Resident |
|---|---|---|
| Section Applicable | 194IA | 195 |
| Rate of TDS | 1% | 20% or 30% |
| Transaction amount | Rs 50 lakhs and above | Any amount |
| TAN | Mandatory | Not mandatory |
| CA Certification to foreign remittance received (Form 15CB) | Not required | Required to certify declaration to be filed with the Income Tax Department. |
| Capital Gains Computation | Not necessary | Is always computed |
For in-depth understanding about TDS on sale of property for residents under section, 194IA read our Blog.
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