Selling A Mohali Property From Abroad: The New TDS Filing Rule For Buyers विदेश से मोहाली प्रॉपर्टी बेचना: खरीदारों के लिए नया TDS फाइलिंग नियम ਵਿਦੇਸ਼ ਤੋਂ ਮੋਹਾਲੀ ਦੀ ਜਾਇਦਾਦ ਵੇਚਣਾ: ਖਰੀਦਦਾਰਾਂ ਲਈ ਨਵਾਂ TDS ਭਰਨ ਦਾ ਨਿਯਮ

Many owners in Canada and the United States still hold plots and flats in Mohali. When one of them sells to a buyer living in India, the buyer holds back part of the price as income tax and pays it to the government. From the first of October, the way that buyer reports the tax has changed. A notification from the Central Board of Direct Taxes, dated the twenty-second of September, puts the whole job on one form filed with the buyer's PAN.

The buyer is the one who deducts

The duty to deduct sits with the buyer. Under section 393 of the new Income-tax Act, which replaced the old law in April, anyone who pays a non-resident a sum chargeable to tax deducts tax from it. The deduction is due when the sum is credited or paid, whichever comes first.

The notification describes this case in plain terms. It is tax a resident individual or Hindu undivided family deducts on the consideration for a transfer of immovable property by a non-resident. Readers who know the old Act will recognise the ground that section 195 used to cover.

The rate is set by the Act

The notification sets no rate of its own. section 393 gives the rate for this payment as the rates in force, the Act's own term for it.

The notes to the new form add one point. The amount of tax deducted includes cess. It also includes surcharge where surcharge applies. The form also asks whether the seller's gain is long term or short term. It records the amount on which tax is deducted and the rate used.

No TAN needed from the first of October

section 397 of the Act asks every person who deducts tax to apply for a tax deduction account number, known as a TAN. Buyers from sellers living in India were already spared this. A buyer from a seller abroad was not, and had to get a TAN for a single purchase.

An amendment to section 397, in force from the first of October, closes that gap. A resident individual or Hindu undivided family buying property from a non-resident no longer needs a TAN for the deduction. The exception names only those two kinds of buyer.

Form 141 gains a Schedule E

The notification adds a new Schedule E to Form 141. This is the combined payment slip and statement that buyers from resident sellers already file on their PAN. Sales by non-residents now go on the same form.

The schedule asks for the property's address and its type. Agricultural land is not among the types listed. It asks for every buyer's PAN and share of the price, and the same share details for every seller.

For a seller abroad, the schedule takes a PAN where one exists, a contact number, an email address and the address in the country where the seller lives. The notification says the contact details and overseas address have to be given whether or not the seller has a PAN.

Where the seller has no PAN, the schedule asks for the seller's tax residency certificate number and tax identification number. The notification says these details are needed so that tax is not deducted at a higher rate. The certificate is the one the seller's own country issues, where its law provides for one. The identification number is the one used in that country, which for many readers means the number their tax authority in Canada or the United States knows them by.

Where there is more than one buyer, each files a separate form. Payments made in instalments are reported one at a time, and each later filing refers back to the earlier acknowledgement number.

Thirty days to pay and to file

The tax is paid within thirty days from the end of the month in which it was deducted, together with Form 141. The form is due in the same thirty days. The buyer then has fifteen days after that due date to give the seller a certificate of the tax deducted, downloaded from the department's portal.

Before October, a buyer from a seller abroad paid the tax within seven days of the month's end. A March deduction was due by the end of April. The buyer also filed a quarterly statement of payments to non-residents.

What it changes for sellers in Canada and the United States

The duty stays with the buyer. For a seller abroad, the buyer's filing is the record of the tax held back from the sale. The certificate the buyer passes on is drawn from it. The new schedule carries the seller's overseas contact details into that record in every case.

The notification speaks of immovable property throughout. It does not mention allotment letters such as a GMADA LOI.

What the notification settles

The buyer still deducts, at the rates in force under the Act, with surcharge and cess counted in the amount. What changed on the first of October is the paperwork. An individual buyer needs no TAN, and one form on PAN now covers payment and reporting within thirty days of the month's end.

The notification does not change who owes the tax on the gain, or how the gain itself is worked out. Those points stay with the Act.

Related reading

- What India's property rules say once an NRI takes Canadian or American citizenship
- Mohali registry values and capital gains on resale
- Mohali property tax for owners living abroad
- Can an NRI buy property in Mohali

Sources: The sources we use are listed on our Editorial Sources page.

This describes what the notification and the Income-tax Act say, and is not tax or legal advice. Every sale turns on its own facts.