NRI selling house property in India? Get all answers related to taxation here.

CA Rounak Jain — Sat, 20 Jan 2024 13:25:54 +0000

As a tax consultant we frequently deal with NRI clients on the topic of house property selling, it is with this knowledge, we have compiled & tried to answer here the top 10 frequently asked question by an NRI while selling their house property in India. We hope you will get your answer here.

Q1) Is there any restriction on sale of property by an NRI in india?

Ans – An NRI can freely sell his property in India, however if the property is an agricultural land,plantation land or farm house then in such scenario an NRI can’t sell property.Further if this agricultural land, plantation land or farm house is inherited to an NRI then he can sell but buyer should not be an NRI.

Q2) Why is the rate of TDS deduction so high for NRIs in comparison to residents?

Ans- It is a precautionary measure taken by the income tax authority, because if an NRI is not filing a return in India then it’s difficult to trace that person.Further, the rate is also kept higher in case an NRI doesn’t File ITR in India the objective of revenue collection on LTCG on the property sold will not be compromised.

Q3) Is there any way by which an NRI can reduce OR lower the rate of TDS deduction?

Ans- Yes an NRI can reduce or lower the rate of TDS deduction by obtaining a Nil/lower deduction certificate by filing Form 13 with the jurisdictional assessing officer.

Q4) Who is responsible for deducting TDS in case of NRI selling property in India?

Ans- The buyer of the property is responsible for the TDS deduction and does all the compliances related to that. However, it’s the NRI seller’s responsibility to disclose all the facts related to residential status to the buyer.

Q5) Is there any threshold limit up to which TDS is not deducted if the property is sold by an NRI?

Ans – As such there is no such limit, irrespective of the amount, NRI selling property in India will be liable for TDS deduction.

Q6) How as an NRI we can get confirmation on whether deducted TDS is deposited in our name or not?

Ans- To get the confirmation whether TDS is properly deducted and deposited, the seller can always ask for Form 16A from the buyer or we can also check in Form 26AS as well by logging on to the Income tax portal.

Q7) How difficult it is to take back or get a refund from the income tax department for the TDS deducted and deposited on the sale of property by an NRI?

Ans- To get a refund of TDS deducted on the sale of property by an NRI, the NRI must file his income tax return along with all the details of capital gains arising on the sale of property. If there is long term capital gains on such transaction then taxes arising on such transaction will be first adjusted with the deducted TDS and residue will be given as a refund.

Q8) NRI selling property in India and reinvesting the same in other properties in India, even then the TDS will be deducted at a higher rate?

Ans- Yes TDS will be levied at a rate (higher than normal) applicable to NRIs, however, to reduce the same one should file FORM 13 with the jurisdictional officer along with the necessary information on reinvestment, based on this if the officer feels satisfied then he can reduce the rate of TDS by issuing a lower deduction certificate.

Q9) What is the timeline to reinvest in a new property to avoid long-term capital gains on the sale of property by an NRI in India?

Ans- To claim this exemption, the NRI has to purchase one house property, within one year before the date of transfer or 2 years after the date of transfer or construct one house property within 3 years after the date of transfer of the capital asset. However, if the property is not finalized before the due date of filing the return then in such case the amount can be deposited into the capital gains saving scheme account.

Q10) Can an NRI buy residential property outside India to save taxes on property sold in India?

Ans – No, to take advantage of section 54, one has to reinvest in properties situated in India only

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