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Client Discussion with “CA Om Pawan Kumar Singla”

Client Asks:- Mr. Singla, today we want to know about ‘Deduction of TDS’ from purchase of property from Non Resident India (NRI) which is major problem to be faced in some issues to the buyer in Income Tax Department.

CA Singla:- Yes, that is true …..

If anyone is purchasing property from NRI then the buyer has to deduct tax at source at specified rate under the Income Tax Act from payment to be made to NRI.

Client Asks:- Singla Sir,  If buyer will not deduct the TDS, then what type of problems to be faced by the buyer in the Income Tax Department.

CA Singla:- Very simple, the department can go for financial penalty and prosecution in extreme cases.

Client Asks:- CA Sahib,  why is the need of deduction of TDS from sale of property by NRI.

CA Singla:- The NRI is liable to pay the income tax on capital gain on the sale of property. The Act has imposed the responsibility on the buyer to deduct the TDS at the time of making the payment to NRI because it is difficult for the department to trace out and collection of tax from NRI. Client:- Oh…ho.. it is very true…Mr. Singla.

 Client Asks:- Mr. Singla, .. you mean if there is a capital gain…. then income tax is applicable….

CA Singla:- No doubt….

Client Asks:-  Sahib,  if there is no capital gain or nominal capital gain on sale of property even then it is necessary to deduct TDS @ rate of say 20%.

CA Singla:- Sir, your question is very.. very.. interesting …. the NRI can offer to deduct his TDS at lower rate on the sale proceed.

Client Asks:- Mr. Singla,  then how it can be decided to deduct TDS at such rate.

CA Singla:- The NRI will submit his document to prove the lower rate of tax applicable on him.

 Client Asks:- Singla Sahib, who will issue the certificate at lower or NIL rate of deduction of TDS.

CA Singla:- The designated commissioner of income tax in international taxation wing will allow to issue this certificate under section 197 of Income Tax Act after making all the preliminary scrutiny of documents.

Client Asks:- Singla Sahib, usually, what type of document to be submitted for getting this certificate.

CA Singla:- Some of documents to be submitted as follows:

  1. Application Form
  2. PAN Card of Seller and his details
  3. Passport of Seller
  4. PAN Card of Buyer and his details
  5. Property documents
  6. Payment Detail
  7. Copy of Sale Agreement.
  8. Computation of Capital Gain
  9. TAN details
  10. And many more….

Client Asks:- Singla Sahib, is there any need to represent the case before the authorities to explain it.

CA Singla:- Yes.. why not.. the authority can ask for any relevant details before issue of this certificate.

After that Client said we come to an fag end of today’s Lower Deduction Rate of TDS u/s 197 on sale of property by NRI over here….we will do meetings again… and hope you will be available on short notice of our request.

Sure…sure sir… satisfaction of our client are the roots of us and fees offered are fruits for us …

Thanks….thanks Mr. Singla..

Reproduced in the interest of other clients or general public who were not present on the day by:

 CA Om Pawan Kumar Singla

For Singla Pawan Associates

Chartered Accountants




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