TDS on Selling Property in India as an NRI: Is Gifting to Parents a Viable Option?
The question is whether it is possible to gift a property to parents who are residents of India and then have them sell it to avoid paying a 23% TDS. The answer is that it is technically possible to transfer the property, but it is not possible to transfer the taxability. As an NRI, you are obliged to follow all NRI rules, so income tax will still charge you, not your parents.
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When your parents transfer money to you abroad, you cannot transfer such a big amount just out of natural love and affection. You have to register a gift deed with your parents, and the money has to be in US dollars. All of this takes time and is complicated. Instead of doing this, it is easier to file a TDS return and start the process earlier. It takes 30 to 45 days, and once you have decided to sell your property, you should approach a tax consultant to do the documentation in advance. You can transfer your PAN from the current jurisdiction to the international jurisdiction, which is the first step. Then, you can file for lower TDS and get a certificate.
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The actual tax you have to pay is only that tax as TDS, and you can claim a refund if you make a reinvestment. If you’re selling property at a loss, you can sell that property without TDS, and you can take the money. It is best to start the procedure before finding a buyer so that you can do all the documentation and transfer of PAN, and then you can smoothly go away.
Conclusion
While it may be possible to transfer property to Indian resident parents to avoid paying TDS, it is not a practical or advisable approach. It is better to file for lower TDS in advance and approach a tax consultant to handle the documentation. It is also important to start the process early to ensure a smooth transaction.