Prices of the immovable properties are always soaring in India which makes it an investment. Accordingly, selling it generates profit which is taxed. In India, the onus to pay such a tax lies on the purchaser, which it deducts from the amount paid to the seller. Similar rules apply when a property is purchased from an NRI. Let us delve into the details of what is such TDS and how is it paid.
The TDS on immovable properties is calculated on capital gains. This means the profit generated by selling a property. However, with the Budget 2024, the Central government has provided relief in the TDS on immovable properties.
TDS on immovable NRI properties
After July 23, 2024, if a person purchases any immovable property from an NRI, he must pay the following tax:
- Property held for 2 or more years: If a property is held by an NRI for more than 2 years, it is calculated as Long Term Capital Gains (LTCG). In such a case a TDS of 12.5 per cent is deducted on the capital gains. earlier it was 20 per cent.
- Property held for 2 or fewer years: Such capital gains are called Short Term Capital Gains (STCG) and are calculated at 30 per cent.
No Cost indexation for NRIs
It must also be noted that earlier the long-term capital gains were calculated subject to the Cost Inflation Index (Indexation). This has been ended in the Union Budget 2024. The benefits of cost indexation with 20 per cent TDS are now available only to the properties held by Indians.
Buyer responsible to pay TDS
While purchasing a property, the buyer must also know that it holds the primary responsibility for collecting the tax from the NRI seller and depositing by filling deduction and payment details in Form 27Q. If there is any tax shortfall, tax authorities are more likely to collect it from the buyer.
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