Tds under dtaa between uae and india on property sale by nri

DEEPAK P G (Querist) 07 May 2020 This query is : Resolved
AN NRI WANTS TO SELL HIS PROPERTY IN INDIA. UNDER I. TAX PROVISIONS THE BUYER IS SUPPOSED TO DEDUCT TDS @ 20% . WHETHER A LOWER RATE IS THERE UNDER THE data BETWEEN UAE AND INDIA?

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When a Non-Resident Indian (NRI) sells property in India, the buyer must deduct Tax Deducted at Source (TDS) under Section 195 of the Income Tax Act. The TDS rate typically depends on whether the capital gains are short-term (30% plus cess) or long-term (20% plus cess), with no benefit from tax slabs allowed for NRIs. While the India-UAE tax treaty is mentioned, the content focuses on Indian tax provisions, stating that buyers must deduct TDS at these rates and quote a TAN. NRIs can apply to the Income Tax Officer for a lower TDS deduction rate before the sale agreement.

Raj Kumar Makkad (Expert) 07 May 2020
When a NRI makes a sale of property in India the buyer is required to deduct TDS under section 195 of the Income Tax Act 1961. The rate of the tax deduction is not fixed at 1% unlike section 194IA in this case. Rather, it would depend upon the nature of capital gains arising out of the transaction. For long term Capital Gains the rat of TDS is 20% plus cess and for Short Term Capital Gain, the same is 30% plus Cess.

Raj Kumar Makkad (Expert) 07 May 2020
*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 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.

Rajendra K Goyal (Expert) 07 May 2020
TDS @ 20% + surcharge + Cess has to be deducted by the purchaser on the total proceeds of the sale.

NRI seller before entering into the agreement of sale, may apply to the Income Tax officer having jurisdiction to consider TDS to be deducted at lower rate.

T. Kalaiselvan, Advocate (Expert) 08 May 2020
When an NRI sells property, the buyer is liable to deduct TDS @ 20%. In case the property has been sold before 2 years(reduced from the date of purchase) a TDS of 30% shall be applicable.
NRIs who are selling house property which is situated in India have to pay tax on the Capital Gains. The tax that is payable on the gains depends on whether it’s a short term or a long term capital gains.

T. Kalaiselvan, Advocate (Expert) 08 May 2020
As per the Indian Income Tax Act, when a resident purchases any property from a non resident, he has to deduct income tax (TDS) and pay the balance amount to the seller. He has to deduct 20% of the sale consideration as tax before making the net payment to seller.

Dr J C Vashista (Expert) 09 May 2020
Very well analysed, explained and advised by experts Sh. Raj Kumar Makkad, Sh, Rajendra K Goyal and Sh. T Kalaiselvan, I fully agree and appreciate.
You will have to deduct TDS @ 20% + cess in terms of Section 195 of the IT Act.

Raj Kumar Makkad (Expert) 09 May 2020
Thanks a lot J C Vashishtha Sir for motivating us.

Rajendra K Goyal (Expert) 09 May 2020
Thanks and regards to expert Dr. J.C. Vashishta ji, for agreeing.

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