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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Tax Provisions for Special Cases

Mr. Rakesh Iyer, an NRI, sold a house property in Pune that he held for 5 years. As his adviser, which statement about TDS on the sale proceeds is most appropriate under the general provisions?

The buyer must deduct TDS on sale of property by an NRI at capital gains rates, applied on the entire sale consideration rather than just the gain, unless a lower deduction certificate is obtained. The 1% resident-seller provision does not apply.

  1. ANo TDS applies because the property is held for more than 24 months
  2. BTDS applies only if Mr. Iyer opts for it in the sale agreement
  3. CTDS is deducted by the buyer on the sale consideration at rates applicable to NRI capital gains, not only on the gain portionCorrect
  4. DTDS is deducted by the registrar at a flat 1% of the guideline value

Explanation

When a non-resident sells immovable property, the buyer must deduct tax at source at the applicable capital gains rate, and this is applied to the whole sale consideration (unless a lower deduction certificate is obtained). The holding period does not remove TDS, and the 1% rule applies to resident sellers.

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