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Sameer (Owner)     03 April 2013

Buying a real estate property from nri


Hello all,

This is my first post and really important one ! So plese help :)

I am buying a flat from NRI. Here are some details 

Flat is 15 years old. The flat is on the name of Mr X and Mrs X. Mr X is now in India and he is agreed to sale us flat for the 70 lacks (40 white 30 black. Out of 40 lacks white , 25 lacks will be bank loan -). As Mrs X is not in India, Mr X has got power of attorny which is verified by our lawyer.  I have following questions 

1)Our lawyer says to make deal safer we will create MOU and Agreement to sale/Assigmnment to sale on same day and will pay 15 lacks by draft and 15 lacks hard cash. Remaingning 25 lack bank loan and 15 lacks cash will be paid on day of final sale deed. Now My question is once we create Agreement to sale does the deal beacomes really safe ? I mean what if the Mr X runs out of India ? Will our money be safe guraded by law ? Will there be still element of risk ?

2)Mr X holds pan card and said he has indian bank account. He says TDS is not applicable with this deal. But from my research it seems like we will have to pay TDS ourself as a source (20 percent for long term gain). So out of 40 lacks white, we will have to pay 8 lack to government and pay remaining 32 lacks to the saler (Mr X). Please provide guidance on this aspect.

Thanks for looking. Waiting for your valuable reply.


 2 Replies

Goutam Prasad (Advocate)     03 April 2013

I have to inform you that in this case you need not require to deduct TDS.

TDS is applicable on long term capital gain. But how can you decide on quantum of TDS. It is not that complete Rs.4000000/- is capital gain.

Capital Gain = Amount  of Sale - Indexed vale of Purchage Price.


Goutam Prasad


Supreme Court of India


Mob: 9810753838

Sameer (Owner)     03 April 2013

thanks for your reply sir. I have confusion I understand 40 lack is not complete capital gain, the flat was purchased fo 10 lack. So isnt 30 lack capital gain ?

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