Selling a Property in India is not easy, especially if you are a Non-Resident. It's not about worrying about finding the right buyer, the right price and the leave you would have to take from your employer. It's about the taxes!!! Worried?? Read On...
If you are a Non Resident in India, then the Buyer of your flat cannot resort to the 1% TDS Clause under Section 194-IA of the Income Tax Act. In that case, he / she has to deduct tax at 20% under Section 195 on the Sale Consideration, if the property is held for more than 2 years.
What does this mean? It means, whether you may or may not have made a profit on sale, but the tax of 20% will be deducted and only the balance 80% will come into your Bank.
But as it is said, every dark cloud has a silver lining...This tax is not lost. You can file your Income Tax Return under Section 139 (1), compute the Capital Gains Tax and claim the excess tax as refund. But you are blocking your money till the Income Tax Refund comes. Isn't it?
Let's say you Sell your flat in Nov 2019, you will file your Tax Returns in July 2020, isn't it? After that the wait starts for your Tax refund to come. If you are lucky, you will get in a month but if you are not..Keep Waiting!!! So you end up getting your refund after almost a year, or, may be a year and a half.Then What? Is there an option? Yes, Sec 197 is th saviour here. You can apply to your Jurisdictional assessing officer to issue a Certificate under this section and bring the Tax Deduction Rate to as low as 3%. This is considerable!!! 17% of your funds get unblocked and can be used.
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