Selling a property in India can be a complicated process, especially for non-resident Indians (NRIs) who are subject to a high TDS rate of approximately 23% on the complete sale value of their property.
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However, there is a solution to this problem – applying for a lower TDS or nil TDS certificate. This can be done if the NRI believes their actual tax rate is less than 23% or if they are selling their property at a loss.
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Some NRIs may also wonder if they can avoid paying the high TDS rate by making a declaration of investment in their income tax return. This is not possible, as the TDS and tax-saving parts are two completely different topics. The government deducts TDS because they consider the NRI a non-resident Indian, regardless of their citizenship status.
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It is important to note that after selling their property, the NRI can make a reinvestment in another property or in infrastructure bonds to save taxes. However, they cannot avoid paying the TDS simply by making a declaration of investment in their income tax return.
Conclusion
In conclusion, NRIs selling property in India should be aware of the high TDS rate and consider applying for a lower or nil TDS certificate if applicable. They should also explore their options for tax-saving investments after selling their property. It is essential to consult a legal or taxation expert to navigate the complex process of selling property in India as an NRI.