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Sale of Property to NRIs or OCIs

CA Gaganmeet Singh

Sale of Property to NRIs (Non-Resident Indians) or OCIs (Overseas Citizens of India) – Income Tax
OR
Purchase of Property in India by NRI or OCI from Indian Resident or Non-Indian Resident

While buying property in India, a person being NRI needs to check whether the seller is a Resident of India or NRI because provisions are different in both cases. Let’s understand the major differences in a summarized tabulated manner:

ParticularsNRI buys property from Indian ResidentNRI buys property from NRI
TDS Section194-IA195
Applicability of TDSSelling Price => Rs. 50 LakhsOn Selling Price
Rate of TDS@1%Case I: Long-Term Property (Property is sold by NRI after 2 years of its purchase)
Rate @20% + *Surcharge + **Cess

Case II: Short-Term Property ((Property is sold by NRI within 2 years of its purchase))
Rate @30% + *Surcharge + **Cess


*Rate of Surcharge:
Sale Price Below Rs. 50 Lakhs: NIL
Sale Price Rs. 50 Lakhs – Rs. 1 Crore: 10%
Sale Price above Rs. 1 Crore: 15%

**Rate of Cess @4%
Challan for
TDS payment		Form No. 26QBChallan No. / ITNS 281
TDS ReturnForm No. 26QB
[Challan-cum-statement of deduction of tax under section 194-IA]		FORM NO. 27Q
[Quarterly statement of deduction of tax in respect of payments other than salary made to non-residents]
Due Date of FilingWithin 30 days from the end of the month in which the deduction is made.Normal TDS Return Filing Provisions apply:

For Payment of TDS:
30th April: If Consideration is paid/credited in March; OR
Within 7 days from the end of the month.

TDS Return Filing Dates:
Q1 (April – June): 31st July
Q2 (July – September): 31st October
Q3 (October – December): 31st January
Q4 (January – March): 31st May
Certificate to PayeeCertificate of TDS in Form No. 16B within 15 days from the due date for furnishing Form No. 26QBCertificate of TDS in Form No. 16A within 15 days from the due date for furnishing Form No. 27Q
Applicability of TAN or PANNRI Buyer needs PAN for Filing Form No. 26QBNRI Buyer needs TAN for Filing Form No. 27Q

CRUX

The residential status of the seller of property is the key factor to determine, whether FORM No. 26QB or Form No. 27Q is applicable.

SellerBuyerApplicable Form
Indian ResidentIndian Resident
OR
NRI / OCI		Form No. 26QB
NRI / OCIIndian Resident
OR
NRI / OCI		Form No. 27Q

For your ready reference, Check out:

I. Steps to fill form 26QB :

  1. Log on to website e-filing portal​ ( https://www.incometax.gov.in/iec/foportal/ ).
  2. Under ‘e-file’, click on ‘e-Pay tax’
  3. Then Click on ‘New Payment’
  4. Select ‘Proceed’ under ‘26 QB (TDS on Sale of Property)’ field
  5. Fill the complete form as applicable. (User should be ready with the following information while filling the form 26QB :
    1. Residential Status of seller
    2. PAN of the seller & buyer
    3. Communication details of seller & buyer
    4. Property details
    5. Amount paid/credited & tax details
  6. After submitting, the next page will ask to select the mode of payment i.e.,:
    1. Net banking;
    2. Debit Card;
    3. Pay at Bank counter;
    4. RTGS/NEFT; or
    5. Payment Gateway.
  7. Select the appropriate payment mode and click on continue to make the payment.
  8. On successful payment a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment​ being made.

Proceed to TRACES portal ( www.tdscpc.gov.in) after 5 days to download Form 16B.

II. Steps to Download Form 16B:

  1. Register & login on TRACES portal ( www.tdscpc.gov.in) as taxpayer using your PAN.
  2. Select “Form 16B (For Buyer)” under “Downloads” menu.
  3. Enter the details pertaining to the property transaction for which Form 16B is to be requested. Enter the Assessment Year, Acknowledgment Number, PAN of Seller and click on “Proceed”.
  4. A confirmation screen will appear. Click on “Submit Request” to proceed.
  5. A success message on submission of download request will appear. Please note the request number to search for the download request.
  6. Click on “Requested Downloads” to download the requested files.
  7. Search for the request with request number. Select the request row and click on “HTTP download” button.

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