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Here are some of the points that will help you while buying a property from an NRI. It includes NRIs asking for a TDS of 1% which is legally wrong. Buyers should take a TDS no and the TDS of the NRI assets. TDS will be deducted from the transaction value. So you need to keep these points in mind while chasing property from an NRI.
For the Non-Resident Indians, if their property is on half for more than 2 years, which is a long-term capital gain, then they need to pay 20% TDS for the transfer of property before July 23, 2024, and 12.5% of the TDS rate on the sale of property by an NRI after July 23, 2024, and for the short-term capital gains, if you have held property for less than 2 years then you have to pay a TDS rates of sellers.
If an NRI sells property in India, then the buyer has to deduct 20% as a TDS on sale as per the rule, but if the property is less than 2 years then TDS will be 10% more, which is 30%. It also changes with the new fiscal years, so if you are planning to sell your NRI property in India, then make sure about the TDS.
I have paid a tax of 30% for the property, which I have held for the past 11 months, and I have sold it before the 2 years, which would be subject to TDS for the 30%. Here are some of the points that I have in mind before selling the property. To get the certificate from the Income Tax department for the TDS deduction, you need to submit various documents, like the purchase price, expenses on construction, and the date of the purchase, and the seller should get the Form 16A from the buyer.
As an NRI, if I sell my property, which is held for less than 2 years, then there will be more TDS deduction, and if I have property which is held for more than 2 years, then it will be less TDS deductions for me because there is more deduction on the shorter holding periods in India for NRIs as compared to longer holdings.
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The TDS rate on property sale by an NRI is 20% on more than 2 years of property held and 30% on property held for less than 2 years. This is because of the TDS section 195 of the Income Tax Act. Here are some of how to purchase a property from an NRI. Get a TAN, pay all their taxes in a challan no. 3281, file a TDS return in Form 27Q, and get your TDS certificate with Form 16A.