Q456. New Tax Deduction at Source (TDS) when buying property in India that is over Rupees

Question: Dear Sir, I have bought a under construction Flat in Pune from a reputed builder in Dec 2011. So far I have paid close to 50% of the total amount based on the site progress. I have now received a mail from them advising me on the TDS mentioned. As per the mail, I can directly pay tax of 1% on payments that I will be making henceforth & pay 99% to the Builder, ELSE pay 100% to the Builder & he in turn pays 1% tax to Govt. I request for your advise on the following points. A) Is this TDS applicable for NRIs? I am an NRI & have been NRI for more than 6 years before the Property Purchase (Dec 2011). I have already paid the Stamp Duty & Registration Charges for my Flat. B) Being an NRI, please advise the easiest mode of payment (whether direct or through builder), in case we need to pay. Thanking you in anticipation. Regards

Answer: TDS payable on property purchases in India came into effect as of June 1, 2013 when Section 194-IA came into effect. (See Excerpt**). Regarding your questions A & B: • TDS is applicable to NRIs also. You state in your email that you have already paid for registration & stamp duty charges! Has the property been registered in your name already? Normally at the time of Registration, the Registrar would check that TDS has been paid if property price is over Rupees 50 Lakh. • The onus of paying this type of TDS is on the buyer! they need to deduct the required TDS before making payment to the seller of the property. Builder may accept the payment, however if they fail to pay the purchaser would still be liable. o The tax required to be deducted if seller provides their PAN number is 1% on the purchase price when the price exceeds 50 lakh Rupees. o If seller does not provide PAN info, then 20% TDS needs to be deducted. • On-line payments can be made from the Indian Tax Departments website. Form 26QB is required for payment of TDS on Sale of Property.