i. NRI seller had purchased the property on November 1, 2019 for a consideration of Rs. 50 Lakh; and
ii. NRI seller does not have any other source of income in India during the FY.
In the above scenario, immovable property sold by NRI Seller will be considered as a Short Term Capital Asset (as the period of holding is less than 24 months). Further, as NRI Seller had purchased the said property for Rs. 50 lakh and sold it for Rs. 70 Lakh, thereby resulting in STCG of Rs. 20 Lakh;
Therefore, as explained in the foregoing question, NRI buyer will have to deduct tax @ 30% on the capital gains computed above. Further, as the NRI Seller does not have any other source of income in India, such tax shall only be increased* by Health and Education Cess on income tax @ 4%. Accordingly, NRI buyer will deduct tax @ of 31.2% (i.e. Rs. 6,24,000 being 31.2% of Rs. 20 lakh) and deposit the same in the Government within 7 days from the end of the month in which deduction is made (i.e. on or before November 7, 2020). Alternatively, in absence of aforesaid required information from NRI Seller, there is a possibility that NRI buyer may deduct tax @ 34.32% on the sale consideration (i.e. Rs. 24,02,400 being 34.32%** of 70 Lakh);
Upon deposit of the tax deducted, NRI buyer shall file statement (i.e. Form 27Q) within 30 days from the end of the relevant quarter in which the tax has been deducted and paid (i.e. on or before January 31, 2021); and
After filing of aforesaid statement, NRI buyer has to produce a certificate of such tax deduction in the prescribed form (i.e. Form 16A) to NRI Seller within 15 days from due date of furnishing the statement (i.e. Form 27Q) as above (i.e. on or before February 15, 2020).
*Surcharge is applicable only if total income exceeds Rs. 50 Lakh
**Surcharge is applicable @ 10% as income is above Rs. 50 Lakh but below Rs. 1 crore