Q.1239 Selling purchased

property in India before

possession

Question: Hello Sir, Your website is very informative for us NRIs. Thanks a lot for building it. I have a question that involves my situation. Question. I am a UK citizen with OCI status. Me and My wife bought a Joint property which was being built by a builder in Sept 2013. The flat was purchased on a construction linked plan and I had made payments accordingly with money sent from UK to NRE account and from NRE account to builder's account. The flat is not built yet and is almost complete, I might be able to get possession soon. Below are my questions Q1. I have read about short term capital gains and long term gains and they talk about the gains after possession of the property. If i want to sell my flat before possession what rules apply to me? Q2. I have read that funds needs to be submitted to NRO accounts (which I have one), but as per banks any money deposited in NRO accounts TDS is deducted, so If I deposit money from flat sale in NRO account, the TDS will be deducted. How does it work? Do I need to inform bank before sale so that they don't deduct standard TDS or do I have to claim the tax back once deducted? Your replies would be really helpful. Thanks and regards, Answer: To answer your questions here are some scenarios: 1. You sell the purchase agreement to another party and the property is not first transferred to your names. Documents will show your buyer buying directly from the builder. However this can only be done with the connivance of the builder. 2. The builder transfers the property to your names. Then when you sell the property capital gains or loss occur depending on your purchase and sale price. TDS on Sale of Property & TDS on Bank Accounts are different • TDS on the sale of property is collected for the purpose of withholding money to pay for capital gains that may become due. If no tax is due then they are refunded once a tax return is filed. • TDS on bank accounts such as NRO account is deducted as a percentage of the interest paid by the bank and not the entire deposited amount. TDS deducted by banks in India can also be refunded if a tax return is filed and the income is below the tax free threshold.