Buying non-resident’s flat involves TDS risks

Buying non-resident’s flat involves TDS risks
09/08/2018 , by , in News/Views

As income tax sleuths intend to keep a close eye on property purchases from non-residents to ensure buyers have correctly deducted tax at source, extra vigilance is required. If there’s no tax deducted at source (TDS), or wrongly deducted, the I-T department takes action against the buyer and not the nonresident seller. In addition to interest and penalties, the I-T Act prescribes imprisonment of 3 months to 7 years.

An issue that arises is whether the TDS is to be computed against the sale value or the income that is taxable in India in the non-resident’s hands. The latter is technically correct, but has its own challenges. This issue and solutions are analysed below.

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