NRI Nil / Lower TDS Certificate – Form 13 – Property Sale, CA Tax Consultant

Table of Contents

NRI NIL TDS (EXEMPTION) CERTIFICATE OR LOWER RATE TDS CERTIFICATE – FORM 13 ONLINE APPLICATION UNDER SECTION 197/195 – NRIs, OCIs, PIOs, INDIANs, OTHERS – CHARTERED ACCOUNTANT SERVICES, CONSULTANT – DELHI, MUMBAI, KOLKATA, BANGALORE (Bengaluru), CHENNAI, HYDERABAD, GURGAON, NOIDA, UP, KERALA, PUNJAB, CHANDIGARH, DEHRADUN, GUJARAT, OTHER CITIES INDIA.

Background

  • Pursuance to withholding tax provisions of Income Tax Act, there are different TDS rates as per transactions.
  • In many cases, applicable TDS rates exceed the actual tax liability arising in the hands of tax payer.
  • Reference to Non-residents TDS provisions (sec 195) (NRI, OCIs), TDS rates always exceed actual tax liability.
  • Sec 195 also governs sale of immovable property (by NRIs, OCIs, PIOs etc). Here, TDS rates are much higher than the actual capital gain tax (and sometimes there is capital loss so no tax arising).
  • Eg if an NRI sells an immovable property @ Rs 2 Crore, and actual capital gain arising on same is only Rs 10 Lakh (which can also be claimed exempted by applying tax saving mechanisms e.g. new house, bonds). However, sec 195 provides for straight TDS @23.92% (i.e 20% plus surcharge & education cess) on the sale amount (irrespective of gain/loss).
  • Similarly, this kind of situation arises in some other non-resident transactions.
  • To seek a relief in these kind of transactions, as per the provisions in section 195 and 197, Non-resident or other assessee or authorized representative can approach the Jurisdictional Authority and apply for a Nil or Lower Rate TDS Certificate.
  • To apply the TDS Exemption Certificate or Lower TDS Certificate, the assessee has to prepare and submit an online application (in Form 13) along with supporting documents.

Online Application Process For Filing TDS Exemption/Lower TDS Certificate

Non-resident (NRI, OCI, PIO) has to arrange all needful documents (refer below) and submit an application (online in Form 13) with the Income Tax Department. Here is online application process:

  • Reference to notification of Govt of India (Ministry of Finance) dated October 25, 2018, all TDS Exemption /Lower TDS Certificate Application preparation and submission happens online on income tax portal.
  • For the online application, initially the applicant needs to create an account on the TRACES website i.e. www.tdscpc.gov.in.
  • In the case of NRIs, OCIs, PIOs, the registration need to be done in the tax payer category.
  • After entering into the homepage select “Request for form 13” under statements/Forms tab.

  • Select the relevant Financial Year and Form and Proceed.
  • In the next step, he has to attach the documents at relevant places, in following manner:
  1. Estimated tax computation (to be attached at template provided by site)
  2. Income tax return for the last 2-3 AY, if filed
  3. Other Relevant Documents (eg In case of property sale matter by NRI docs can be Property purchase deed, sale MOU, passport copy etc)
  • On doing above, portal will process the application and generate Request Number and ask for verification.
  • Verification can be done by using DSC or E-verification through Net Banking.
  • After submission, assessee or his authorized CA can trace application through Request Number.
  • Hereafter, the application processing happens at the jurisdictional Assessing Officer level.
  • On verifying the documents at AO office, AO provides a date of hearing on online portal along with email.
  • After doing needful wrt hearing etc, the AO issues TDS Exemption or Lower TDS Certificate.

Also readNRI Property Sale, Capital Gain Calculation, Capital Gain Tax Planning Services In India

Documents Requirement For Filing TDS Exemption Certificate Application By NRIs/OCIs (Documents & Information Requirement For NRI Property Sale Matter Lower TDS Certificate – Online Form 13 U/s 197)

Though as per facts of the case, documents are subject to facts, however, some standard documents required for preparation of TDS Exemption (or Lower TDS) Certificate Application are as under:

  • Applicant NRIs Income Tax Login Details (to be created, if not already created)
  • TRACES ID (to be created for Filing Application Form 13 online)
  • Passport Copy (with 2-3 year internal pages copy)
  • TAN of Buyer(s) with their TAN Letter
  • Property Agreement To Sell (ATS) with Buyer
  • Circle Value (or Stamp Duty Value) of property being sold
  • Property Purchase related documents (Sale Deed, Builder Buyer Agreement, Receipts etc)
  • Bank statements for latest 2 years
  • ITR Copy for latest 2-3 years
  • 26AS Copy latest 2-3 years

Also readWhat Are The Income Tax And Foreign Exchange Laws In Relation Buying Property In India By NRIs, Foreign Citizens?

Time Period For Processing of NRI Property Sale Matter Lower TDS Certificate – Online Form 13 U/s 197

Though there is no time limit provided in the Income Tax Act or Rules, however, as per internal guidelines/ procedures, the IT Department process the application at the earliest. As per the procedures, after submission of application online, the application moves to the Jurisdictional TDS Officer, which takes approx 2-4 days time. Once the application is received by the Jurisdictional TDS Officer, it takes approx 10-15 days time for processing of TDS Exemption (or Lower TDS) Application of Non-Resident property sale matter. Hence, in total, in general it takes approx 15-25 days for processing of this certificate.

Also readWhether NRIs, Foreign Citizens, OCIs, Can Buy Agriculture Land, Farm House or Plantation Property In India?

Benefits Of Applying Lower TDS Exemption Certificate Application By NRIs/OCIs

Sometimes, NRIs, OCIs are in dilemma that whether they should go for a Lower TDS Certificate or get full TDS deducted now & claim refund later on in ITR. Here are few points which can help them in understanding the benefits of applying lower tds certificate:

  • Firstly, there should always be an attempt to not to get money blocked in Tax Department when there is a provision to avoid it i.e. Lower TDS Certificate Application. Later on, there may be various issues and assessee can loose the TDS amount. E.g. assessee misses the ITR filing due to unavoidable reasons.
  • It is cost beneficial also to apply for lower TDS Certificate and get TDS reduced. The saved amount of TDS can fetch the NRI seller opportunity return by investing that money in other instruments e.g Fixed Deposit.
  • Many times, Buyer do mistake in TDS return filings or misses the filing of TDS return. In that case TDS credit does not flow to seller. Hence, it causes loss of TDS amount. Hence, reduced TDS amount via Lower TDS Certificate reduces the risk of TDS amount as well.

General NRIs OCIs PIOs FAQs – TDS Exemption Certificate, TDS Lower Certificate 

Q: What is the 1% TDS Rate Law in India in relation to Sale of Immovable Property in India? Is This Applicable for NRIs, PIOs?

Ans: Under Section 194IA, if any person is buying a property from a ‘Resident In India’ and the property amount is Rs 50 Lakh or more then 1% TDS is applicable on the transaction. Buyer needs to deduct TDS @1% from the payment it is making to the seller. After deduction, Buyer deposits the same with Govt of India. This 1% TDS Law Wrt Property Purchase is applicable only in case of ‘Resident In India’ Property Seller. If Seller is Non-Resident i.e. NRI, OCI, PIO or other Non-Residents, then this section is not applicable, and non-resident section 195 will be applicable. Hence, in case of Non-Resident Seller of Property, under the provisions of section 195, Maximum rate of Income Tax will be applicable.

Q: Who is liable to deduct TDS in relation to Sale of Property Transaction?

Ans: All the TDS provisions, whether it is in relation to Resident Seller or Non-Resident Seller, complies by the Buyer of Property. Though the buyer do the TDS deduction from the payment of the buyer, however, it is seller who is responsible to comply with the TDS provisions.

Q: How does buyer deposit TDS in case of sale of property by Non-Resident Seller? How the credit of tax transfers to the seller of property? What are the CA services, a buyer can take in relation to Non Resident Property sale purchase matter?

Ans: Under Section 195, the Buyer deducts the TDS from the amount payable to Non-Resident (Seller) and deposits with Govt. Buyer deposits the tax through Challan 281 with Govt of India. After deposit of taxes, the buyer files e-TDS return (Form 27Q) with TDS Deptt Portal of Govt of India. In the TDS return filing, the buyer submits the details of Seller PAN. Hence, on filing of TDS return, the tax transfers to NRI Seller PAN. NRI Seller can check this tax in his 26AS also. NRI Seller can claim this tax as a credit in his Income Tax Return. A buyer can take CA Services in relation to applicable TDS rates, TDS depositing, TDS return filing, TDS Certificate downloading. We are providing these services to many clients who are doing property purchase from NRIs.

Q: What Form NRI has to submit for Lower Rate or NIl TDS Certificate ? What is Form 13?

Ans: As per the Income Tax Rules, Form 13 is the Application form for applying Lower or NIL Rate TDS Certificate or TDS Exemption Certificate. Here is the Form 13.

Q: What is a general check list of documents and information required for preparation & filing of online application (Form 13) for Lower TDS Certificate or TDS Exemption Certificate?

Ans: In case of NRIs, PIOs, OCIs, following is a general check list for document and information in relation to preparation of an online application for Lower Rate TDS Certificate or TDS Exemption Certificate:

  • PAN Card Copy of Applicant
  • Income Tax Login details of Applicant, if already created
  • TRACES Login details of Applicant, if already created
  • Passport Copy
  • Inside Pages of Passport reflecting India entry/exit dates
  • ITR Copies of past 2 years
  • 26AS of current year and past 2 years
  • TDS Account Number of proposed TDS Deductor (buyer in case of property sale-purchase matter)
  • Computation of Capital Gain or other income as the case may be (in relation to present transaction)
  • Present Transaction related document (e.g. Agreement To Sale, if property sale transaction)
  • Supporting documents for computation (e.g. property purchase and payment documents if property sale matter)
  • Any other document as per the facts of case or as per the requirement by the I T Deptt office.

Q: Whether lower rate TDS given by the AO is all inclusive? Whether Education cess or Surcharge is to be added on the lower rate TDS approved by the AO?

Ans: The lower rate TDS rate, which AO approves, is generally a TDS rate excluding education cess and applicable surcharge. Hence, Buyer need to deduct Education Cess and Surcharge (as applicable) on the TDS rate. Also, the lower rate TDS certificate, which AO approves, reflects all necessary information in this regard.

Q: Whether there is any validity period of Lower TDS Certificate? If Sale Transaction fails with existing Buyer, can the lower TDS Certificate be used for new Buyer?

Ans: The Lower Rate TDS Certificate comes with a validity period of the respective Financial Year. E.g. a Lower TDS Certificate issued by the Income Tax Department in FY 2021-22 will be valid for FY 2021-22. It starts from the date of issue and remains valid till last date of respective financial year. If a sale agreement is cancelled between NRI seller and buyer after obtaining lower TDS Certificate then the lower TDS Certificate will not be usable for new buyer. Non-resident seller will have to apply for fresh lower TDS Certificate with new buyer and agreement. Lower TDS Certificate is TAN specific, hence, new certificate need to be obtained against new TAN.

S LOHIA & ASSOCIATES – For NRI TDS Exemption Certificate Services

  • S Lohia & Associates is a Chartered Accountant Firm in Connaught Place, New Delhi, India.
  • We are handling a wide range of NRIs, PIOs, OCIs and Other Categories Non-Residents since two decades.
  • S Lohia, a chartered accountant firm, comprising of expert of various areas, is regularly advising & assisting NRIs in applying & obtaining TDS Exemption Certificate or Lower TDS Certificate from Income Tax Department
  • We have been providing these services to hundreds of NRIs, OCIs since many years.
  • Our Team is very well versed with the best process & techniques for applying TDS Exemption Certificate Application.
  • S Lohia Team possesses rich experience in liaison with Income Tax Department. Our team always gets best and effective results.
  • S Lohia & Associates, do also provide various other kind of services to NRIs, OCIs, PIOs, Other Non-Residents i.e. NRI Income Tax Return, NRI Capital Gain Tax, NRI Property Buying Services, NRI Services, NRI 15CA 15CB Services, NRI Repatriation Services etc
  • S Lohia Team regular update on NRI Matters via NRI Blogs etc.

This Article clarifies certain FAQs of NRIs, PIOs and Others eg:

  • I am an NRI and wish to sell an immovable property in India, however, buyer is proposing 20% plus surcharge & cess as TDS on the sale amount. What to do?
  • What is the process of applying lower rate TDS Certificate or TDS Exemption Certificate by NRI?
  • How to apply online for TDS Exemption Certificate by NRIs?
  • What are the enclosure documents for applying TDS Exemption Certificate by NRI?
  • Whether there is any exemption to Non-residents (including NRIs, PIOs, OCIs) for applying TDS Exemption Certificate online.
  • I am an NRI. I wish to apply for a TDS Exemption Certificate or Lower Rate TDS Exemption Certificate for NRI. How to apply the same? And What is the procedure?
  • How do NRI apply for TDS Exemption Certificate online?
Contacts

S Lohia & Associates Chartered Accountants 
Address : 1301, Naurang House (13th Floor),
21 Kasturba Gandhi Marg,
Connaught Place, New Delhi 110 001.
Tel No. : +91-11-43505250, 66095250
Tel Fax No. : +91-11-43505250
Mobile No. : 9810353219, 9910353219
Email Us: sulabhlohia@slohia.com