When it comes to selling or buying a property, TDS compliance by NRI is crucial to ensure adherence to all necessary procedures. However, sometimes, due to reasons like lack of knowledge or misguided advice, important compliance steps may be missed, leading to potential repercussions in the future. As an NRI who has already sold a property and overlooked essential tax compliance, it is natural to question the possibility of rectifying the situation now.
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It is possible to do the lower TDS compliance even after completing the sale deal, which is good news, even though it is late compliance. The only additional expenses you would have to bear are some late fees and interest. It is important to note that the sooner you initiate compliance, the better. The transaction date would be considered as the date when the property was registered, and you can approach the Income Tax Department to rectify the missed compliance.
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The buyer also has to pay a late fee of Rs. 300 per day, and both the buyer and seller can divide the extra charges and late fees. The compliance can be initiated by paying the same tax which was supposed to be paid earlier, along with the additional interest, which is around 1% to 1.5% per month. After paying the due amount, the buyer can also take a TAN number to ensure future compliance.
Please note that you cannot receive the benefit of lower TDS after completing the deal, and the only option is to calculate and pay the TDS and then file the return and claim the refund. Many people may wonder whether they can avoid compliance since they have not received any notice yet. However, this is not a viable solution as the penalties, late fees, and interest levied by the Income Tax Department can be quite brutal.
In the case of sellers, they may receive a notice asking them to pay the interest, TDS, and penalty. On the other hand, buyers may have to pay a late fee of Rs. 300 per day until they have paid the entire amount due. As an NRI taxpayer, you need to understand that the tax authorities can issue notices for up to 16 years, which is a long period. Therefore, it is always better to rectify the situation as soon as possible.
Conclusion
If you have missed out on important TDS compliance by NRI while selling or buying a property, it is possible to rectify the situation by paying the due amount and the additional interest. It is crucial to initiate TDS compliance by NRI as soon as possible to avoid any penalties, late fees, or interest levied by the Income Tax Department. Remember, it is always better to be proactive than reactive when it comes to TDS compliance by NRI.