NRI Lower Rate TDS, TDS Exemption Certificate – Form 13 – Chartered Accountant, Tax Consultant

TDS EXEMPTION CERTIFICATE OR LOWER RATE TDS CERTIFICATE – APPLICATION UNDER SECTION 197/195 – ONLINE APPLICATION – NRIs, OCIs, PIOs, Indians, Others – CHARTERED ACCOUNTANT SERVICES, TAX CONSULTANT – DELHI, MUMBAI, OTHER CITIES INDIA.

Background
  • Under Income Tax Act 1961, as per the TDS provisions, there are various TDS rates for various kind of transactions.
  • In various transactions, it happens that the actual tax liability in the hands of tax payer is lesser than the applicable TDS on that transaction.
  • In case of transactions, which are falling under section 195 ie TDS on payments to Non-residents, there is high probabiliy of higher rate of TDS than the actual liability arising on that transaction.
  • One of the transaction nature, which falls under section 195, is sale of immovable property by the Non-Residents (including NRIs, OCIs, PIOs etc). In this kind of transaction, the TDS rates are much higer than the actual tax. Eg if someone 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 by investing the money in new house or bonds). However, if straight provisions of section 195 are applied, then the tax withholding is to be made @23.92% (i.e 20% plus surcharge & education cess), though the actual tax is very very less. Further, in many cases, when there is loss on sale of property, then the tax payable is nil.
  • Similarly, on other transactions (of non-residents u/s 195; or residents under other provisions), there is a probability that TDS rate is more than the actual tax.
  • To seek relief in these kind of transactions, there are some provisions in section 195 and 197. Under these provisions, the assessee or authorized representative can approach the Jurisdictional Authority and apply for a TDS Exemption Certificate (if actual tax liability is nil) or Lower Rate TDS Certificate (if actual tax liability is lesser than the proposed TDS).
  • To apply the TDS Exemption Certificate or Lower TDS Certificate, the assessee has to prepare TDS Exemption  Certificate Application (along with supporting documents) and submit the same with the respective authority.
  • Earlier, this application was used to get filed manually with the respective authority office.
  • However, recently, vide Notification No 74 dated October 25, 2018, Govt of India (Ministry of Finance) has modified the process from manual to online. Hence, now the application is prepared & submitted online.
Online Applcation Process For Filing TDS Exemption/Lower TDS Certificate
  • Reference to notification of Govt of India (Ministry of Finance) dated October 25, 2018, now all TDS Exemption Certificate/Lower TDS Certificate Application’s preparation and submission happens online on income tax portal.
  • For the onine application, initially the applicant needs to create an account on the TRACES website ie 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, we have 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 4 AY
  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.
Exemption From Online Process – CBDT Order U/s 119(1) dated Dec 24, 2018

To remove genuine hardship, which certain applicants face in filing online application in Form No 13, CBDT allows:

  • NRIs, who are not able to register themselves on TRACES, to file manual application in Form 13 before TDS officer or in ASK CENTERs till 31.12.2018.
  • Resident applicants to the file manual application in Form 13 before the TDS officer or in ASK CENTREs till 31.12.2018.
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?
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 buyer. 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?

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 cheque this tax in his 26AS also. NRI Seller can claim this tax as a credit in his Income Tax Return.

Q: What is the offline Form for Lower Rate TDS Certificate or TDS Exemption Certificate? What is Form 13?

Ans: As per the Income Tax Rules, Form 13 is the Application form for applying Lower 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.

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,
  • 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.
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