BlogLOWER TDS CERTIFICATE ON SALE OF PROPERTY BY NON RESIDENTS
Posted on August 30, 2020
Faceless assessment's face of the future Income Tax
Hon’ble Prime Minister of India, Sh. Narendra Modi on 13th August, 2020 while inaugurating National E-Assessment Centre "NeAC" announced that henceforth there will be transparency in the department and honest taxpayer's will be honoured. In this regard, inter alia, he made the announcement of Faceless Assessment Scheme with effect from 13 August, 2020.
He made the following important announcements:
a) Faceless Assessment and Taxpayer’s Charter: Faceless Assessment & Taxpayer’s Charter have been enforced w.e.f. 13th August, 2020. Assessments will be made without personal interaction between Jurisdictional Assessing Officer and the Assessee. The said reforms are aimed at making the tax system seamless, painless, and faceless.
b) Faceless Appeals before CIT(A)- All appeals before Commissioner of Income (Appeals) [“CIT(A)”] shall be faceless w.e.f. 25th September, 2020.
Posted on August 14, 2020
Half Yearly Audit Report on Reconciliation of Share Capital
The Ministry of Corporate Affairs (MCA), with a view to reinforcing the investor interest and better corporate governance, amended the Companies (Prospectus and Allotment of Securities) Rules, 2014 by issuing Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019 vide its notification dated 22nd May 2019 which is effective from 30th September 2019.
The amended rules require the Unlisted Public Companies to file the Audit Report on Reconciliation of Share Capital in Form PAS 6 as on the end of every half-year with effect from September 30, 2019, duly certified by a Company Secretary/Chartered Accountant in practice. The due date for filling the MCA Form PAS 6(after deployment of form on MCA Website) for the period 01.04.2019 to 30.09.2019 and 01.10.2019 to 31.03.2020 is 13.09.2020.
Posted on August 04, 2020
Gujarat High Court Allows Refund of “Accumulated Credit on Input Service” in case of “Inverted Duty Structure”
The Landmark judgement by Gujarat High court in the case of VKC Footsteps India Pvt Ltd directs Revenue to allow Petitioner’s refund claim considering the unutilized ITC of “input services” as part of the “net input tax credit” (Net ITC) for the purpose of calculation of refund of the claim as per Rule 89(5) of CGST Rules, 2017 for claiming refund u/s 54(3) of CGST Act, 2017. This will be a great relief for many industries functioning in the field of textiles, railway locomotives and parts, handlooms, solar modules, e-commerce, etc. as it was held that by prescribing the formula in sub-rule 5 of Rule 89 of the CGST Rules,2017 to exclude refund of tax paid on ‘input service’ as part of the refund of unutilized input tax credit is contrary to the provisions of Sub-section 3 of Section 54 of the CGST Act,2017 which provides for a claim of refund of ‘any unutilized input tax credit’
Posted on July 30, 2020Extension of due date of ITR filing for AY 2019-20
“In view of the constraints due to the Covid pandemic & to further ease compliances for taxpayers, CBDT extends the due date for filing of Income Tax Returns for FY 2018-19 (AY 2019-20) from 31st July, 2020 to 30th September, 2020, vide Notification in S.O. 2512(E) dt 29th July, 2020.”Posted on July 22, 2020
Income-tax (17th Amendment) Rules 2020
Income-tax (17th Amendment) Rules 2020 have brought in certain procedural amendments in the following rules:
These Rules will be effective from 1st October 2020.
Rule 37CA (Time for TCS payment);
Rule 37-I (TCS Credit);
Rule 31AA (TCS Return); and
Form No. 27 EQ (TCS Return to give effect to amendments in TCS Section i.e. 206C as introduced in the Finance, Act, 2020 whereby TCS applicability was extended to the following transactions effective from 1st October 2020.
Posted on July 22, 2020
Techies to work from home till December, 2020
The department of telecom has extended the exemption given to the IT & ITeS industry to work from home till December this year. The exemption was going to expire at the end of July.
"In view of the ongoing concerns due to Covid-19, the department has decided to further extend these relaxations upto Decmeber 31, 2020..."
Posted on July 21, 2020
The Ministry of Finance via clarification dated 15th July 2020 has clarified that hand sanitizers attract a GST rate of 18%.
The clarification reiterated that Sanitizers are disinfectants like soaps, antibacterial liquids, Dettol etc. which all attract standard GST rate of 18% under the GST
Posted on July 18, 2020
In order to achieve the moto of “Ease of doing business” amidst this pandemic period of COVID-19, Government of India has introduced the facility of “Turant Customs”. Various notifications and circulars are being issued every now and then to give effect to the same. Now, in order to enhance the efficiency in the Customs clearance processes, CBIC has decided to take certain measures vide Circular No.32/2020-Customs dated 6th July, 2020.Posted on July 14, 2020Merchant trade transaction is one which involves shipment of goods from one foreign country to another foreign country, where the goods do not enter Indian Territory. Recently a ruling in case of “M/s Sterlite Technologies Limited” (GUJ/GAAR/R/04/2020) held that supply of goods from a non-taxable territory to another non-taxable territory, shall be an Inter-state supply and henceforth, IGST shall be levied on such merchant trade transaction.Posted on July 09, 2020
Posted on June 27, 2020
Income Tax department refunds Rs.62,361/- crore during lockdown: CBDT
Income tax refunds amounting to Rs 23,453.57 crore have been issued in 19,07,853 cases to taxpayers and corporate tax refunds amounting to Rs 38,908.37 crore have been issued in 1,36,744 cases to taxpayers during this period.
Posted on June 26, 2020
Ministry of MSME vide Notification dated 26 June 2020 has notified criteria for classifying the enterprises as MSME and prescribed form and procedure for registration of MSMEs w.e.f 1 July 2020
For details, please visit : https://msme.gov.in/whatsnew/new-criteria-classification-micro-small-and-medium-enterprises-gazette-notification-1st
CBDT vide Notification No. 35 of 2020 dated 24th June 2020 has provided relief to the taxpayers by further extending certain due dates for making compliances which were extended originally through the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020 on 31st March 2020 in light of the challenges faced by taxpayers due to outbreak of COVID-19.Posted on 25th June, 2020
Lower TDS on sale of property by NRI'sIf NRI's sell their property located in India after retaining it at least for two years, they are liable to pay Long-term Capital Tax at the rate ranging between 20.80 to 28.50%. However, this tax rate can be lowered or cut down with the help of lower TDS deduction certificate available under the IT Act, 1961.
There is a fair amount of confusion about tax imposition for Non-Residents Indians who want to sell any property that they may have in India. NRI’s who are selling house property situated in India have to pay capital gain tax. The tax that is payable on the profit depends on whether it is a short term or long-term capital gain.
What is a capital gain on property sold by NRI’s?
The property held by an NRI seller is categorised as a “Capital Asset”, which can be a long-term capital asset or a short-term capital asset. When a property is sold after a period of two years from the date it was owned – it attracts long-term capital gain tax. In case it is held for less than two years or less, it attracts short-term capital gain tax.
Long term capital gains shall be implied with a concessional rate of 20% (excluding surcharge and cess) on the sale value whereas the short-term capital gains shall be implied at the regular tax slab rate which is 30% on the sale value.
Capital gains for NRI's selling property
Capital gains = Sale Consideration - Cost of Acquisition. (purchase cost to NRI). If Non-Resident Indians sell their property located in India after retaining it at least for two years, then they have to pay a long-term capital gain tax ranging between 20.80 to 28.50%, under Section 195 of the Income Tax Act, 1961. However, NRI's can lower down this TDS deduction with the help of exemptions and deductions available under the same Act. According to Section 197, every buyer who purchases property from NRI seller, needs to deduct a TDS at the rate of 28.50% on gross sales proceeds. In such a situation, first paying TDS at the rate of 28.50% and then claiming the refund after filing an income tax return, which may take months, would be a tedious task.
Instead, NRI sellers can avail a lower or No TDS Deduction Certificate from the Income Tax Department in case their actual tax rate is lower than 28.50%. This will help NRI's to save themselves from the hassle as well as avoid locking their money through TDS Deductions at the rate of 28.50% of the sales proceeds for months.
It is advisable to apply for low or no TDS Deduction Certificate under Section 197 of the Income Tax Act, as soon as one finds a prospective buyer and the sale value of the property is fixed.
The Income Tax Department may ask for the following documents to issue a Nil or Lower Tax Deduction Certificate.
- Sale Agreement / Sale Deed
- Proofs of cost of acquisition
- Indexed cost of acquisition
- Income Tax Returns
- TAN of buyer
- Bank account statement
- Proof of advance received
- Any other document deemed relevant
An NRI seller can also apply for a lower tax deduction. This can be done by deducting TDS only on capital gains. As per Section 195 of the Income Tax Act, the TDS will be calculated only on capital gains, instead of calculating on the total sale value. This can help NRI's to arrive at 1% or 2% TDS, and in some cases, even No TDS is required if there is no actual gain reflected in calculations. Moreover, NRI's can also save on TDS by reinvesting capital gain amount in another property in India within two years from the sale.
They can also invest the amount in tax-free bonds within a span of six months from the date of sale.
NRI's can save on TDS by making wise moves at the time of property sale and even after receiving the proceeds. It is important to stay informed and check income tax regulations related to long term and short-term capital gain tax before making such sale.