Dos and donts for buying a property from an NRI
We examine the factors that one should consider, ready to move flats in mumbai before opting to purchase a property from an NRI seller
Among the many impacts that the Coronavirus pandemic is likely to have on India’s real estate in Mumbai sector, is an increased interest from non-resident Indians (NRIs). Experts are of the opinion that the unprecedented crisis may push many non-resident buyers to move towards their country of origin, thereby, boosting demand for real estate.
However, as property management in India might not remain as easy as it used to be before the COVID-19 crisis, this may also make many NRIs unwilling to move back to India. This may prompt them to sell their real estate investments in India, to invest in the countries where they currently reside. This move would benefit domestic buyers, as they may get a chance to buy premium properties at possibly lower rates.
The involvement of an NRI in the sale would bring into play several legal and financial responsibilities, as far as the buyer is concerned. Let us see what a buyer, who is purchasing a property from an NRI seller, should and should not do.
Special power of attorney (PoA)
Insist on the seller’s presence at the time of registering the documents. However, if the NRI seller cannot be present during the transaction, Resale Flats in Mumbai he has to give his representative in India a special power of attorney (PoA), to carry out the deal. While a PoA is given to carry out all sorts of financial transactions, a special PoA is granted to carry out a specific task.
NRE, NRO and FCNR accounts
The buyer should never deposit any money in the NRI buyer’s account held in India. The money must be deposited in their Non-Resident External (NRE) or a Non-Resident Ordinary (NRO) or Foreign Currency Non-Repatriable (FCNR) accounts.
TDS on sale of property by NRI
In India, the responsibility to collect TDS (tax deducted at source) and submitting the amount with the authorities, buy house in mumbai typically rests on the buyer, irrespective of the seller’s nationality. However, it must be clarified here that there are no written rules about who submits the TDS, as long as it is submitted. If the TDS is not deposited, the tax authorities are likely to question the buyer and not the seller.
The rate at which the buyer has to collect the TDS, varies significantly if the seller is an NRI. Only 1% of the deal value has to be deducted at source if the seller is local and if the property rate is higher than Rs 50 lakhs. However, the TDS rate is as follows, if the seller is an NRI:
Less than Rs 50 lakhs
Rs 50 lakhs to Rs 1 crore
Over Rs 1 crore
The rates are high, because it includes the capitals gains tax on the deal, as well. While a flat rate of 20% of actual gains has to be paid by the seller as capital gains tax, the buyer has to deduct 20% of the deal value. buy home in mumbai the seller will have to get in touch with tax authorities, to get the amount refunded. On his part, the buyer has to deduct TDS on the entire transaction value. After filing the TDS, the buyer has to issue Form 16A to the seller.
TAN and PAN for buying NRI property
The buyer would need a Tax Deduction and Collection Account Number (TAN), if he is buying a property from an NRI. In the absence of a TAN, the I-T Department can slap a penalty on you. In case there are multiple buyers involved, each of them will require a TAN. The seller, on the other hand, must have an Indian PAN card. They are not mandated to hold a TAN though.
Penalty for not collecting and submitting TDS
Failure to collect and submit the TDS, Property in Mumbai will attract interest of 12% on the outstanding amount. The I-T Department can also impose a penalty on you.
Do I have to submit TDS before property registration?
Among the many documents, the sub-registrar would also ask for the TDS documents. Any miscalculation in TDS submission, may not hamper your plans to get the property registered, as the sub-registrar would not engage in working out the calculation. However, this is likely to be taken up by the tax authorities at a later stage.
Tips for buying NRI property
Payment: In case the property is held jointly, the payment should be made, according to each party’s share, in their separate accounts.
Hire experts: As such transactions are full of complexities, apartment in mumbai it is advisable to hire chartered accountants and lawyers to conduct the business, to steer clear of any troubles in the future.
Ask your bank: If you are taking a home loan for the purchase, you bank can help you with the TDS deduction and submission process without a fee.
Buy, Sell, Rent Properties in Navi Mumbai Houses
Navi Mumbai Houses is the biggest real-estate property portal (website) in Navi Mumbai, Mumbai, and Thane. Do you want Buy / Sell / Rent a house, flats in Navi Mumbai our portal helps you to find a home (Flat) to your budget so please visit n find.
For more information visit: https://navimumbaihouses.com/