Checklist for NRIs planning to purchase property from another NRI 

If you are planning to acquire any land or purchase of property from NRI, the following checkpoints needs to be kept in mind from the perspective of the Indian Income Tax Law:

  • A buyer buying property from NRI is responsible to deduct tax at the time of payment of sale consideration to the NRI Seller. The question that arises is whether TDS is applicable on the entire sale consideration (as is applicable in case of a resident seller) or only on the capital gain portion. Please refer our post on ‘Whether TDS rate is applicable on gross sale value or on net capital gain portion?”

  •  TDS Rate would be 20% (plus surcharge and cess) in case land or property in India was held by Seller NRI for more than two years from the date of purchase of property from NRI or at the rate of 30% (plus surcharge and cess) in case the land or property in India was held by Seller NRI for less than two years

  •  Tax so deducted needs to be deposited electronically within 30 days from the end of the month of deduction along with a simple challan Form (Form 26QB). For filing TDS Form 26QB, there is no requirement to obtain TAN, however the NRI purchaser needs to register himself in TRACES with PAN

  •  The NRI buying property in India is also responsible to generate TDS Certificate (Form 16B) from the TRACES and must be furnished to the Seller within 15 days from the due date of TDS Return

  •  The Resident Seller can claim the TDS amount as refund by filing a tax return, if the seller the actual capital gain tax is lower than the TDS amount. TDS credit will show in Form 26AS of the Resident Seller only if the NRI Purchaser successfully completes all the above procedural compliances 

 In case the NRI is purchasing the immovable property from an Indian resident, then there are separate provisions to be followed. Please read our post on “Checklist for NRIs planning to purchase property from an Indian Resident”  

Disclaimer: The views / the analysis contained therein do not constitute a legal opinion and is not intended to be an advice. Readers of this document are advised to seek their own professional advice before taking any course of action or decision, based on this document.

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