₹2.6 crore, and Chitransh wanted to finance ₹1.95 crore through a loan. However, his plan fell apart when he approached a bank for a home loan. The loan manager informed him the loan would not cover the 23.92% TDS or tax deducted at source that he has to deposit with the Income Tax Department.
During a property sale, the buyer must deposit 20% (surcharge and cess extra) of the property’s total sale value, and not just the gains, as TDS when the seller is an NRI. “This meant I had to pay almost 50% of the value from my own pocket, which was impossible for me," said Chitransh, who wanted to use only his first name. "I asked the seller if I could use the downpayment for TDS, but he suggested I could only use about 10% of the 25% I had to pay him in the first month as he needed the remaining funds for his son’s wedding “I still needed to shell out nearly ₹35 lakh extra from what I had budgeted.
I’m salaried and don’t have so much surplus cash to spare," he added. The seller found another buyer and the deal fell through for Chitransh. The 20.8-23.9% (includes surcharge and 4% cess) TDS to be paid during a property sale when the seller is an NRI is a pain point not just for the seller but also for the buyer.
The seller has to lock away a significant amount in TDS till they get a refund, whereas the buyer can face cash flow issues, said Urvil Modi, founder and chief executive of Samriddhi Wealth Management, a Sebi-registered investment advisor. Chitransh is a case in point. “The TDS component is a serious problem for buyers as the banks will not fund it," said Modi.
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