I want opinion on the tax implications of buying property from an NRI. Section 195 of the Income Tax Act specifies that Tax Deduction is at Source for any sale of property owned by an Non Resident. Tax deducted is at 20% for property purchased from a non-resident.

Does anyone have any experience of such a transaction?
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  • From what I have read and understood.

    TDS deposit percentage is governed by the seller status not the buyer status.

    If you are an NRI wanting to buy a property in India, you would deduct 1% TDS only.

    If you are selling and still have NRI status, in that case the buyer of your property would be deducting TDS as per the applicable percentage.


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  • This was one of the mistakes in my life..I bought a property from and NRI and took loan from SBI. - a 1st time buyer story from gurgaon

    Not knowing the consequences untill I had paid the 10% token and approached bank for loan.

    It wasted lot of precious time of my life as it had become an everyday job to visit Bank/ CA/ Court.

    Finally the ordeal eneded in 3-4 months. Here is my experience being a buyer of a property sold by NRI.

    1. Its the poor Buyer's responsibility totally take care of the TDS part, if it gets skipped the IT dept would be after his life.

    2. SBI told me after lot of confusion that I need to deposit 20.66% of the propert sale amount as TDS with Income Tax dept as challan u/s 195. 33% if property is sold within 3yrs ST captial gain, mine was long term capital gain hence 20.66%.

    3. First the TDS needs to be deposited , only then the loan will get disbursed. So the buyer is suffocated and choked to pay token amount(at risk) , then the 20%TDS. So totally 30% of the property value at stake.

    4. Then the buyer needs to apply for a TAN number, as he cant deduct TDS from NRI using PAN number. More pain and waiting for another month.

    5. Then submit TDS return using TAN(buyer) and PAN(seller) in the FY qtr of property transaction using form 27Q, not the usual 26.

    Nobody even experienced CA's or bank are knowing every bit of detail required to process such a transaction.

    Finally I was through all this and my seller had to sum this up in his next ITR return.

    So I dont recommened going through so much hardships unless you are getting a good and cheap deal. I had my token at stake, so took the pain.

    Also I still have doubt that how can the bank analyze that the seller is an NRI. They dont check passports, in my case I told them upfront (huge mistake). My seller even had an Aadhar and PAN as he was previously living in India.


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    2 Comments
    • satyasinha4 months ago
      Dear Vaibhavji

      Sorry about your experience. The buyer I am purchasing the flat from says he is a resident. Even if he is employed abroad.

      Can you or anyone else, tell me, how to determine his status for tax purposes? What is the documentation?
  • Originally Posted by Vaibhavji
    This was one of the mistakes in my life..I bought a property from and NRI and took loan from SBI. - a 1st time buyer story from gurgaon

    Not knowing the consequences untill I had paid the 10% token and approached bank for loan.

    It wasted lot of precious time of my life as it had become an everyday job to visit Bank/ CA/ Court.

    Finally the ordeal eneded in 3-4 months. Here is my experience being a buyer of a property sold by NRI.

    1. Its the poor Buyer's responsibility totally take care of the TDS part, if it gets skipped the IT dept would be after his life.

    2. SBI told me after lot of confusion that I need to deposit 20.66% of the propert sale amount as TDS with Income Tax dept as challan u/s 195. 33% if property is sold within 3yrs ST captial gain, mine was long term capital gain hence 20.66%.

    3. First the TDS needs to be deposited , only then the loan will get disbursed. So the buyer is suffocated and choked to pay token amount(at risk) , then the 20%TDS. So totally 30% of the property value at stake.

    4. Then the buyer needs to apply for a TAN number, as he cant deduct TDS from NRI using PAN number. More pain and waiting for another month.

    5. Then submit TDS return using TAN(buyer) and PAN(seller) in the FY qtr of property transaction using form 27Q, not the usual 26.

    Nobody even experienced CA's or bank are knowing every bit of detail required to process such a transaction.

    Finally I was through all this and my seller had to sum this up in his next ITR return.

    So I dont recommened going through so much hardships unless you are getting a good and cheap deal. I had my token at stake, so took the pain.

    Also I still have doubt that how can the bank analyze that the seller is an NRI. They dont check passports, in my case I told them upfront (huge mistake). My seller even had an Aadhar and PAN as he was previously living in India.


    As per Income Tax rules of india, any person who has spent more than 182 days in a FY out of the country is a NRI for that FY. This has no link to his passport of Residency.

    Even if he has a PAN or Aadhar or indian passport, that does not matter.

    There is no clear documentation apart from his ITR, as he is not liable to pay taxes in India during that FY.

    Usually banks ask for a cancelled cheque of the seller's account. My seller's status got evident at that moment as it was a NRE/NRO account.

    "chor wahi jo pakda jaaye"
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