TDS Rules on Sale of Property in India

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Key Takeaways: If you are an NRI looking to sell a property in India, there are taxes that you need to pay. The buyer is also obligated to deduct tax at source called TDS or (Tax Deducted at Source) before paying the purchase value to you. So what is this tax and is it mandatory? Find out here.

Many NRIs own a property in India, be it their own or their family home. NRIs who want to sell property in India have to pay tax on capital gains, just like resident Indians. However, the buyer of the property is expected to cut TDS (Tax Deducted at Source) on the capital gains.

Suppose you are an NRI selling property in India. In that case, you will need to have an Income Tax officer in India assess the capital gains on your property, based on your property documents.

So how much tax do you have to pay?

The amount of tax payable depends on the duration for which the property is held. If a house or property is sold after two years from the date it was purchased – it is considered to be a long-term capital gain. In case the home is owned for two years or less, it is termed as a short-term capital gain.

Even if you are an NRI who has inherited the house or property from your ancestors, the taxes still apply. The way to calculate whether the gains on the property sale are long term or short-term gains is by considering the date of purchase of the previous owner.

At present, long-term capital gains are taxed at 20% (plus surcharge and education cess) and short-term gains are added to your income, and you will have to pay income tax according to the tax slab you are in.^[1]

The TDS amount deducted is on the entire transaction amount and not on the capital gains. To read more about the TDS on Long-Term Capital Gains from a property sale, click here.

How can you save on TDS?

You can apply for lower tax certificate from your Income Tax assessing officer in India, who will issue this document within 3-4 weeks days of the application. ^[1]It is advisable to get this lower tax certificate before you execute the sale agreement. In case you do not wish to opt for this certificate, you can apply for a refund on excess TDS at the time of filing your income tax returns.

Final Note: TDS is applicable any time you want to sell your property, irrespective of the property value. If you decide to repatriate the sale proceeds, you will need to submit forms 15CA & 15CB to your bank.

With DBS Treasures, you can invest your sales proceeds in India’s top performing mutual funds. All you need is an NRI savings account to get started and our dedicated investment specialist will guide you on the next steps. So why wait? Apply Now

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Disclaimer: The purpose of the piece is not to provide advice but to provide information. Sound professional advice should be taken before making any investment decisions. The bank will not be responsible for any tax loss / other loss suffered by a person acting on the above.