4 Essentials Tax checks for NRI/ PIO/ OCI purchasing property in Kolkata, West Bengal, India
Posted on October 01 2020
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NRI’s / PIO’s / OCI‘s have been lapping up property investments across India. However, keeping in mind Cross Border Taxation, and DTAA between India and other countries (India-US DTAA, India-UK DTAA, India-Singapore DTAA, etc) it is essential that you keep Tax documents and checks in order.
Four of the absolute essentials Tax checks for NRI’s / PIO’s / OCI‘s purchasing property in Kolkata, West Bengal, India or anywhere in India, are as follows:
1. Corporation / Municipal Taxes: Receipts for property tax bills ensure that taxes for the property are paid up-to-date to the government/municipality. For properties falling under the BBMP jurisdiction, it is mandatory for property taxes to be paid up to date so a buyer could get a Khata issued in his name. It is therefore important for the buyer to make enquiries with the government/municipal authorities to ensure that all the dues are cleared by the seller. The buyer should ask the seller for the latest original tax paid receipts and bills and check the details of the owner’s name, the tax payer’s name, and the date of payment on the receipt. If the owner does not have the tax receipt, the buyer can contact the municipal body along with the survey number of the property to confirm the ownership of the land. Nevertheless, the buyer should also ensure that other bills such as the water bill, electricity bill etc. are paid up-to-date.
2. Tax Deducted at Source (TDS): The Government through the Central Board of DirectTaxes (CBDT) has made a compulsory tax (withholding tax) which has to be deducted by a buyer of an immovable property (other than agricultural land) valued in aggregate to Rs 50 lakh or more. The primary objective for introducing this rule is to track all the high value real estate transactions, which are not being registered to curb black money and reduce tax evasion. As per current law, the buyer is required to deduct or withhold 1% of the value of the property and deposit this with the Government using the Form 26 QB. The liability of deducting and depositing the TDs is with the Buyer and if not done on time has severe financial penalties. If the property seller is an NRI then the TDS or the withholding Tax will be as per provisions of Section 195 of the Income Tax Act which can be 20% or 30% of the total payments being made for the property purchase.
3. Documents: Property documents, form the essentials of any property transaction, for a plot of land or a fully furnished house or an apartment. If the documents and title is not clear then the property will have a fraction of the actual market value. It is very important to check and verify the original legal documents, like the Mother Deed, Mutation Certificate, Encumbrance and other documents, of the property through a qualified and experienced Property Lawyer. The documents to be checked are the Mother Deed, Sanction Plan, Mutation, Corporation/Municipal Taxes among other documents.
4. Payments: As an NRI / OCI / PIO purchasing a property in India, it is essential that you keep a track of all payments made for the purchase as these documents and details will come handy for Tax purpose. It is advisable, as far as possible to pay from your NRE Accounts in India. Cash payments are illegal and should be avoided.
Please keep your Tax checks in place and the supporting documents in absolute safe keep. Mist documents will be required after ages and if you donot have the documents when require it will trouble for you.
Our qualified and experience Lawyers and Advisors have in-depth experience, especially in NRI / OCI / PIO property purchase and property sale transactions. We specialise in Cross Border Tax, Double Taxation Avoidance, Legal and RBI/Banking assistance for your Transactions with reference to property laws in India, US, UK, Singapore and DTAA.
Tax Assist is a professional income tax consultancy in India for both corporate houses and individual tax payers; the latter comprising Salaried Individuals, Seafarers, Professionals and Non Resident Indians.
With the help of Tax Assist and its team of income tax professionals, taxpayers can minimize their Income Tax liability, maximize their net income and create opportunities to save for current and future needs while maintaining proper accounting standards and income tax returns which are compliant with the Law.
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