Whenever any Non Resident purchases immovable property, they can purchase either from Resident person or from another Non Resident. The Tax treatment of both these situations is different from each other.

A. When NON RESIDENT INDIAN purchases property from a Resident Person ( Seller is Resident )

Since the seller is Resident Person, hence section 194IA is applicable for TDS.

  • As per Section 194IA, the buyer of an immovable property is required to deduct TDS @1% of the Total Sale value. So the Non Resident buyer will be required to deduct TDS @1% at the time of making payment to the Resident seller.
  • Sec 194IA for TDS deduction is applicable only if the sale value is Rs. 50 Lakhs or more. no TDS requirement for such sale by Resident seller if sale value is less than Rs 50 Lakhs.
  • This section 194IA covers residential property, commercial property and Land. But not applicable on agriculture land.
  • TAN & PAN requirement – In sec 194IA, any buyer (Resident as well as NON RESIDENT INDIAN) of immovable property is not required to obtain TAN No. PAN is sufficient for Deducting TDS & Payment of TDS to Government.
    • Both buyer & seller should have PAN.
      • Buyer needs PAN (in place of TAN) for TDS payment to Government.
      • Seller needs PAN so that TDS is not deducted at higher rate of 20% as per sec 206AA.
    • Both parties, neither the buyer nor the seller requires to obtain TAN.
  • TDS deduction – TDS is required to be deducted at the time of making payment or crediting the seller in his books, whichever is earlier. TDS deduction is required on Each payment including any advance payments made to Seller. So if payment is done in instalments, then TDS is to be deducted on each instalment paid.
  • TDS payment & return – TDS so deducted needs to be deposited to the government by filing challan-cum-return FORM 26QB within 30 days from the end of the month of TDS deduction. Example: if TDS deducted on 25 March, then TDS payment using Form 26QB has to be done on or before 30th
  • TDS Certificate – Buyer after TDS payment to government, has to furnish TDS certificate in FORM 16B to the seller within 15 days from the due date for furnishing Form 26QB. FORM 16B can be generated and downloaded from TRACES site. For example: in above case, due date of FORM 26QB was 30th April, so Form 16B should be furnished till 14TH

 Other Points to remember:-

  • Sale Value will include club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to the transfer of the immovable property.
  • In case of multiple parties, This Form 26QB has to be filed for Each Combination of Sellers & Buyers. Example: if there is 1 Seller and 2 Buyers, then two Form 26QB’s will be filed and if there are 2 sellers and 2 buyers, then 4 Form 26QB’s will be filed.

B. When One Non-resident purchases property from another Non-Resident Person (Seller is Non- Resident)

Since the seller is also Non Resident Person, hence section 195 is applicable for TDS.

  • All the provisions of sec 195 which are applicable to Resident buyer for purchasing immovable property will also apply on Non-Resident Buyer.
  • As per Section 195, the Non resident buyer of an immovable property is required to deduct TDS @20% for LTCG and @Slab rates for STCG. This is covered in detailed here – https://taxbaniya.com/sale-of-immovable-property-by-non-resident-in-india/
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