Updated TDS Rates for NRIs Selling Property in India (2024-25 Fiscal Year)
Updated TDS Rates for NRIs Selling Property in India (2024-25 Fiscal Year)
As of the 2024-25 fiscal year, the Tax Deducted at Source (TDS) rates for Non-Resident Indians (NRIs) selling property in India have been revised. Here's an updated guide to help you navigate these changes.
Understanding TDS
TDS is a mechanism where the buyer deducts a certain percentage of the sale consideration before paying the seller. This ensures that taxes are collected in advance and helps NRIs comply with Indian tax regulations.
Revised TDS Rates Effective from July 23, 2024
|
Sale Consideration (₹) |
TDS Rate |
Surcharge |
Total Tax (Including Surcharge) |
Health & Education Cess |
Effective TDS Rate |
|
Less than 50 Lakhs |
12.5% |
Nil |
12.5% |
4% of Total Tax |
13% |
|
50 Lakhs to 1 Crore |
12.5% |
10% of TDS |
13.75% |
4% of Total Tax |
14.3% |
|
1 Crore to 2 Crores |
12.5% |
15% of TDS |
14.375% |
4% of Total Tax |
14.95% |
|
2 Crores to 5 Crores |
12.5% |
15% of TDS |
14.375% |
4% of Total Tax |
14.95% |
|
Above 5 Crores |
12.5% |
15% of TDS |
14.375% |
4% of Total Tax |
14.95% |
Illustrative Example
If an NRI sells a property for ₹1.5 Crores after holding it for more than two years, the TDS calculation would be:
- Sale Consideration: ₹1,50,00,000
- TDS @ 12.5%: ₹18,75,000
- Surcharge @ 15% on TDS: ₹2,81,250
- Total Tax (TDS + Surcharge): ₹21,56,250
- Health & Education Cess @ 4%: ₹86,250
- Total TDS to be Deducted: ₹22,42,500
Capital Gains Tax
The nature of capital gains—short-term or long-term—depends on the holding period of the property:
- **Long-Term Capital Gains (LTCG):** Applicable if the property is held for more than two years, taxed at 20%.
- **Short-Term Capital Gains (STCG):** Applicable if the property is held for two years or less, taxed as per the individual's income tax slab rates.
Surcharges and cess are added to these rates based on the sale consideration.
Tax Residency Certificate (TRC) and Double Taxation Avoidance Agreement (DTAA)
Holding a valid TRC from your country of residence can help in availing benefits under the DTAA, potentially reducing the TDS rate. For instance, NRIs residing in countries with which India has a DTAA may benefit from reduced TDS rates upon providing a TRC.
Required Documents for Claiming Lower TDS Rates
To avail a reduced TDS rate, NRIs should provide the buyer with:
- A copy of their passport
- Proof of NRI status
- Original Tax Residency Certificate (TRC)
Steps for TDS Payment
1. **TDS Deduction:** The buyer deducts the applicable TDS from the sale price.
2. **TDS Deposit:** The buyer submits the deducted tax to the government within 30 days of the transaction.
3. **TDS Certificate Issuance:** The buyer provides the NRI seller with Form 16A as proof of the deducted TDS.
Filing Income Tax Returns
NRIs must file an income tax return in India to report the capital gains from the property sale. This allows them to claim deductions for eligible expenses and potentially secure a refund for any excess TDS paid.
Conclusion
Understanding the updated TDS regulations is crucial for NRIs selling property in India. It's advisable to consult with a tax expert familiar with NRI taxation to ensure compliance and optimize tax liabilities. Additionally, platforms like BazaarX offer valuable insights and connect NRIs with property specialists who can guide them through the selling process, including handling TDS compliance.
*Please note that tax laws are subject to change. It's essential to stay updated with the latest regulations or consult a tax professional for the most current information.*
For further assistance, NRIs can explore platforms like BazaarX.co, which provide expert guidance on property sales, taxation, and compliance for a seamless transaction experience.