TDS- An important aspect for NRIs
Being an NRI and having the potential to invest in properties, is the perfect spot to be in India. For those NRIs, who look forward to sell their investments made some time back in India, the degree of advantage is a notch higher for them. As per reports, major Indian metros have registered a 20-30 percent year-on-year hike in property sales from the NRIs in the last 2-3 years. For such NRIs, TDS (tax deducted at source) is an important pillar, which will embolden and guarantee maximum returns.
As per the general rule, if an NRI takes possession of a property for a period more than 3 years and tries to sell it off, then the long term capital gains tax of 22.66% will be levied. Although, taxation remains unchanged for an NRI, the TDS is calculated on a different note for an NRI, in comparison to an Indian resident. With the number of NRIs mulling to sell properties in India witnesses a sharp increase, it becomes de rigueur for them to come into terms with the taxation rules of real estate transactions and TDS tops on the ruling list.
TDS for NRIs
According to the proponents of the Indian real estate market, any NRI willing to put up their property for sale in India and close the deal successfully, is entitled to a certificate of lower tax deduction of non-reduction, from the assessing officer. For an NRI, TDS involving surcharge of 22.66%, will be computed on the capital gains instead of the sale price.
The whole procedure consumes around 2-4 weeks and demands the submission of some of the key documents from the NRI, namely PAN, sale-agreement, bank statements, income tax returns etc. The need for such formalities calls for the hiring of a Chartered Accountant or a lawyer, to work out the transactions in an effortless manner. At first, one needs to write off the expenses incurred such as transfer fees, legal fees and travelling fees amongst others. The difference between the indexed cost and this would be tagged as capital gains.
How NRIs can save TDS
An NRI can save TDS and one of the primary ways to lay hands on this waiver, is if the particular NRI invests again in capital gains acquired from the sale of another property or in the tax-free bonds. It is instances such as this, when an NRI is exempted from tax in India and hence, no TDS. To initiate it and get it done, an NRI needs to apply for a tax-exemption certificate, under Section 195 of the ITA(income tax act).
Another way of saving the TDS is by taking the professional help of a Chartered Accountant. By availing the services of CA to file form 15 CA and CB, an NRI is likely to be free of any tax liability and can transfer the money back to the country.
