Upcoming Union Budget 2025 may streamline tax compliances for NRI property transactions
The Union Budget 2025, set to be presented by Finance Minister Nirmala Sitharaman on February 1, is expected to address tax complications faced by homebuyers when purchasing property from NRIs. Experts suggest reforms to simplify the process of tax deduction at source (TDS) and other compliance measures, reported upstox.com.
Taxing NRI Property Sales: A Complex Affair
When buying residential property worth ₹50 lakh or more from resident Indians, homebuyers need to withhold 1% of the purchase value as TDS and can conveniently deposit it using Form 26QB. However, the process becomes cumbersome when the seller is an NRI.
Currently, buyers must deduct tax at a higher rate, obtain a Tax Deduction and Collection Account Number (TAN), deposit the tax, and file e-TDS returns, adding multiple layers of compliance. Experts at Deloitte highlight that obtaining a TAN solely for a single property transaction often results in inactive TANs.
Simplifying Tax Compliance for NRI Transactions
To address these complexities, Deloitte recommends introducing a challan-cum-statement system similar to what is available for resident sellers. This reform would streamline the TDS process for NRI property transactions, making it less burdensome for buyers.
Additional Expectations for NRIs
The upcoming budget may also introduce measures to ease tax payments for NRIs. Key expectations include:
- Allowing tax payments from overseas bank accounts: Currently, tax payments can only be made through Indian bank accounts, creating difficulties for NRIs. Allowing payments from overseas accounts could provide significant relief.
- Tax refunds to overseas bank accounts: Enabling the credit of tax refunds to foreign accounts could simplify processes for non-resident taxpayers.
- E-verification of ITRs via foreign mobile numbers: Allowing e-verification of income tax returns through international mobile numbers could make compliance easier for NRIs living abroad.
These measures, if implemented, are expected to reduce procedural hurdles and encourage smoother transactions in the NRI property market.
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