Budget 2025: Deloitte asks for simpler TDS terms for NRIs selling houses in India

Budget expectations: The announcement of the Union Budget for 2025 is set to take place on February 1, coming just six months after the interim budget of July 2024. As the Union Budget draws near, experts are emphasizing the need for reforms to streamline tax compliance processes.

In her list of recommendations, Divya Baweja, Partner at Deloitte, has urged FM Nirmala Sitharaman to simplify the Tax Deducted at Source (TDS) procedure for homebuyers acquiring property from Non-Resident Indians (NRIs).

Challenges with the current TDS system

Currently, homebuyers are required to withhold 1% of the property purchase value as TDS if the property is valued at Rs 50 lakh or more. When dealing with resident sellers, the process is straightforward, utilizing a challan-cum-statement system through Form 26QB. However, for transactions involving NRI sellers, the tax rate is higher.

Buyers are required to:

Acquire a Tax Deduction and Collection Account Number (TAN).

Submit the deducted tax payment.

Complete e-TDS filings.

This procedure can be arduous, particularly for individuals purchasing property for the first time.

Obtaining a TAN solely for this transaction could result in dormant TANs and extra administrative complexities.

Recommendations

A simplified challan-cum-statement process, mirroring that utilized for resident sellers, is being introduced. 

This modification aims to:

Remove the necessity for TAN registration.
Simplify the tax deposit and filing procedures.
Lessen compliance challenges for buyers.

Benefits for buyers
It will simplify the tax compliance process for homebuyers purchasing property from NRIs. The streamlined process would result in greater efficiency and a quicker turnaround.