I am thinking of buying a flat that is in the builder's name as the seller hasn't registered it on his name. The seller has been living in the US for the past 4 years. Now, I am willing to buy this flat under a tripartite agreement and deposit the money in the seller's local account. I want to know if there will be any issue over the Section 195 IT Act later as the seller is stating himself as a non-NRI?
Answered on November 08, 2017
The sellers claim that he is a non-resident will not suffice. Residential status has to be detemined as per provisions of section 6 of the of Income Tax Act.
Non Residential status: As per the provision
i) if a person stays in India for less than 182 days in current year then he will be treated as a Non resident in India.
ii) if a persons stay in India for more than 60 days but less than 182 days in a current year and the aggreagte stay in last 4 years is less than 365 days.
So if he turns out to be a resident, then TDS will be deducted on sale consideration @ 1% as per the provision of section 194IA of the Income Tax Act.
If in case he non-resident, then TDS will deducted as per the provisions of section 195 of the Income Tax Act.
Non Residential status: As per the provision
i) if a person stays in India for less than 182 days in current year then he will be treated as a Non resident in India.
ii) if a persons stay in India for more than 60 days but less than 182 days in a current year and the aggreagte stay in last 4 years is less than 365 days.
So if he turns out to be a resident, then TDS will be deducted on sale consideration @ 1% as per the provision of section 194IA of the Income Tax Act.
If in case he non-resident, then TDS will deducted as per the provisions of section 195 of the Income Tax Act.
