Buying resale from an NRI seller? ₹18L of the price is your TDS problem

General
1

From 1 October, buying from an NRI got a bit easier on paper. Resident individuals and HUFs no longer need a separate TAN to deduct TDS. You can deposit it using your PAN. Mint has the rule change

The paperwork changed. The liability didn’t.

Here’s what a ₹1.2 cr resale flat in Indiranagar looks like when the seller lives in Dubai:

  • TDS is calculated on the full sale price, not on the seller’s gain
  • On a long-term holding, that works out to roughly 14 to 15% including surcharge and cess, so about ₹18L
  • With a resident seller, it would be 1%, so ₹1.2L
  • If you deduct short or file it wrong, the tax department comes after you, not the seller

Then there’s the part almost nobody plans for: the home loan.

  • The bank pays the disbursement to the seller, but the TDS is yours to deposit
  • Ask your lender, well before the registration date, whether that ₹18L comes out of the loan or out of your own pocket
  • The seller can apply for a lower deduction certificate before the sale, which brings the TDS down to their actual tax. If they apply after the sale, it’s too late to help
Knowing this, would you go ahead?
  • Yes, but only if the seller has a lower deduction certificate
  • Yes, it’s just paperwork with a good CA
  • No, too much risk sits with the buyer
  • Already bought from an NRI (tell us how it went)
0 voters

If you’ve done one of these, how did your bank handle the TDS part?

2

we see a lot of NRI sellers, and what works best is have the seller apply for a lower TDS deduction certificate.

In such cases, the booking amount (which is generally 10%) absorbs the TDS as well and the rest can be funded by the bank.