Will TDS apply despite capital loss from sale of property?

livemint.com:

I am working in Australia and had invested ₹15 lakh in a residential property in India in January 2018. I now plan to sell the property for ₹18 lakh. Can the buyer deduct tax at the time of payment despite this transaction leading to a capital loss due to indexation? —Name withheld on request There has been a fair amount of debate in the past on whether TDS (tax deducted at source) is to be made on the entire amount of sale consideration or only on the portion of income chargeable to tax.

The debate has been settled by the Supreme Court in the case of GE India Technology Centre (P) Ltd. v. CIT and has been reiterated by subsequent Supreme Court judgements.

The Supreme Court ruled that TDS can only be made if the non-resident is liable to pay tax under the tax law in the first place. Further, it has also ruled that an application to the tax officer may be made by the payer when the latter is certain that TDS is applicable but not sure of the amount of payment chargeable to tax in the hands of the non-resident and hence the amount of TDS. When the payer is fairly certain, then she or he can make their own determination as to whether TDS is applicable and, if so, what should be the amount thereof.

In your case, since the cost and proposed sale numbers are readily available, the capital gains computation can be made and it would result in a capital loss under tax after indexation [Indexed cost = ₹1,500,000 / 272 * 348 = ₹19,19,117]. Taking this into account, ideally the buyer is not required to deduct TDS, nor is there any need to approach the tax officer to make this determination. You can share all documents with the buyer of your property, so that the buyer can correctly compute the capital loss amount.