Key Things to Remember If You Have NRI Landlord
Oct 28, 2017 Home Trading Steps
NRI investors are a crucial group in Indian real estate market. They usually fall into higher brackets in terms of those who have high spending power and go for premium luxurious properties in posh localities. They usually invest in real estate to build their asset and also to earn some extra moolah through rent. But as a tenant who have NRI landlord needs to take care of certain aspects.
Read through the article to know what those aspects are:
TDS deduction: you need to deduct 30 percent as TDS when you are paying the monthly rent under Section 195 of the Income Tax (I-T) Act. It will also include education cess as well. Hence the total deduction will come out to be 30.9 percent. As a tenant, its your responsibility to address this task and account it to the I-T Department.
Issue the certificate: After you have deducted the TDS, its responsibility of the tenant to provide his or her NRI landlord with a TDS certificate for the purpose of income tax. The TDS details can be checked from the Form 26AS.
Take the correct account detail: the tenant needs to collect and deposit the rent amount in the right account of the landlord. It has to be non-resident ordinary (NRO) account. If you are also an NRI then the money cannot be transferred to a non-resident rupee (NRE) account.
The requirement of TAN: the tenant needs to have a TAN or Tax Deduction and Collection Account Number because you are deducting the tax. This 10 digit alpha-numeric identity is to carry out all TDS related work with the IT department. In addition, both the tenant and the landlord need to have a PAN (Permanent Account Number) card to do the business.
Know the right form: the tenant need to take help from a chartered accountant (CA) to fill the right forms and submit online as the money will be transferred out of India. So there are two kinds of forms that a tenant needs to fill if he or she has an NRI landlord.
1)Form 15CA: the tenant had to fill Form15CA if a single transaction amount is not more than Rs 50000 and the annual amount not more than Rs 2.5 lakh. The tenant also needs to fill the same form if the landlord gets a certificate from IT department stating to decrease the tax deduction amount.
2)Form 15CB: if the payment exceeds Rs 50000 and Rs 2.5 lakh in a financial year, then the tenant needs to fill Form 15CB. The form comprise of several details such as the deduction, TDS rate and the DTAA (Double Tax Avoidance Agreement). An NRI might have to pay taxes in the country he or she is residing in. So these details might help to avoid those taxes.
Read through the article to know what those aspects are:
TDS deduction: you need to deduct 30 percent as TDS when you are paying the monthly rent under Section 195 of the Income Tax (I-T) Act. It will also include education cess as well. Hence the total deduction will come out to be 30.9 percent. As a tenant, its your responsibility to address this task and account it to the I-T Department.
Issue the certificate: After you have deducted the TDS, its responsibility of the tenant to provide his or her NRI landlord with a TDS certificate for the purpose of income tax. The TDS details can be checked from the Form 26AS.
Take the correct account detail: the tenant needs to collect and deposit the rent amount in the right account of the landlord. It has to be non-resident ordinary (NRO) account. If you are also an NRI then the money cannot be transferred to a non-resident rupee (NRE) account.
The requirement of TAN: the tenant needs to have a TAN or Tax Deduction and Collection Account Number because you are deducting the tax. This 10 digit alpha-numeric identity is to carry out all TDS related work with the IT department. In addition, both the tenant and the landlord need to have a PAN (Permanent Account Number) card to do the business.
Know the right form: the tenant need to take help from a chartered accountant (CA) to fill the right forms and submit online as the money will be transferred out of India. So there are two kinds of forms that a tenant needs to fill if he or she has an NRI landlord.
1)Form 15CA: the tenant had to fill Form15CA if a single transaction amount is not more than Rs 50000 and the annual amount not more than Rs 2.5 lakh. The tenant also needs to fill the same form if the landlord gets a certificate from IT department stating to decrease the tax deduction amount.
2)Form 15CB: if the payment exceeds Rs 50000 and Rs 2.5 lakh in a financial year, then the tenant needs to fill Form 15CB. The form comprise of several details such as the deduction, TDS rate and the DTAA (Double Tax Avoidance Agreement). An NRI might have to pay taxes in the country he or she is residing in. So these details might help to avoid those taxes.
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