- This topic has 31 replies, 17 voices, and was last updated 1 year, 1 month ago by
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AIts a very long story….in march 2025, we started looking for resale flats near to our parents house as we are about to have our 1st child. One of the real estate brokers has informed us about a 2bhk sale from NRI. NRI was not aware of tax implications and took the token amount of 50k. Initial sale price agreed was 62 lakhs. After knowing tax implications in India (TDS etc) he was hesitant to sell the proper, broker contacted CA and tried to convince us that the seller would sign the sale deed as resident Indian but we got to know that cutting TDS will be the responsibility of the buyer and IT dept will question, punish and penalized us if they found out. after many discussions – it was agreed that seller will do gift deed of the property to his mother and sell it to us. We also agreed to reduce the sale deed value to 40 lakhs and pay the rest in cash ( even though its difficult for us to arrange such cash – taking gold loan, personal loan etc) Broker has mistakenly informed the seller that capital gains will be calculated on government market value (28 lakhs) and sale deed value (40 lakhs). We mentioned multiple times to the broker that capitals gains is calculated on buying price initial sale deed (16 lakhs) and new sale deed value (40 lakhs)- he was very confident and insisted. Broker confidently made us sign the sale agreement for 50k rupees we paid. Now he got to know the reality from CA and informed the seller. Seller is saying he will be at loss if he pay such hefty tax. Both tried to convince us that seller will sign as resident Indian and they are asking us what will be the risks if they do us – how IT dept will catch us. We refused and seller is now refusing to sell us home. Seller will give back 50k with interest it seems. Please advice what can be done in this case as we have signed agreement with us as proof and faced many months of mental stress for arranging cash and discussions.
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LIf they want to pretend to be residents, what’s your loss?
You can always argue that you never knew they were NRI 🤔-
ABut if IT dept found out we will be the first point of contact it seems as the seller is living abroad and i heard that new income tax bill gives social media access to officers, we have whatsapp chats with him 🙁
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LYes, you can clear the whole WA chat and start a fresh them pretending resident. If they aren’t disclosing they are NRI, you can’t know, right?
Your fear is right, but if the other party wants a deal like this, then I feel they will be in more trouble if anything happens. I don’t know how they will suddenly file their return as residents. Consult some experienced CA before making any decisions. If they give you a green flag, go ahead without much worry. -
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MYou should take refund. As I don’t encourage tax evasion.
But access to sm doesn’t mean they can read your deleted chats.
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LIt’s not evasion, actually. Anyway, the seller is going to get the credit/refund while filing the ITR. They just want to delay the tax payment for a while. OR may want to make some other adjustments OR be scared of the TDS deduction and think that they will not receive the refund.
OP, broker, and some CA tried convincing them as per the post, but the seller seems more rigid and wants an alternate way suggested by their CA.
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SCA Here – it is the responsibility of the payer to deduct TDS correctly. If he doesn’t, the department will recover that tax amount from the payer. The law is very, very clear.
If the department notices that you deducted a much smaller amount & sends you a notice = the only way out here would be to file an appeal & keep fighting the department, hoping that the tribunal will listen to your case – this will take 2-4 years minimum – Mental Agony & Fees extra
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LThanks.
Yes, but here the opposite party wants to classify them as a resident. Probably they are telling the OP that they will stay here in the current FY; on the Sales Deed as well, they will identify them as a resident; now, how can OP know whether they are NRI or not?
(Forget about the phase where OP knows that they are NRI. And then suggest what’s the best? As they are no longer gonna tell the next party that they are NRIs for sure. 😄)-
SThe law tells you not to stop at the red light
Whether you could see the traffic light or not, whether you are colorblind, or whether somebody convinces you wholeheartedly that the signal is green – all of these do not matter
If you don’t stop at the red signal, you are breaking the law
I understand it will take Sherlock-level probing to actually figure out whether a person is NRI or not – but the government has made the payer responsible for figuring that out.
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LYes Sir. I am just curious: in the current FY, the seller wants to become a resident, and from now on, he will stay in India only, and he will be convincing the Buyer the same.
So, still, one will be at fault? Or is there any law which prevents it?
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SThis is such a great question!
Residential status is determined separately each year
As of today (2nd May), we don’t know what the status would be for FY 25-26.!
Matlab, he can stay for 183 days or he can leave mid-year as wellBut like I said, the law is straightforward (even if unfair), but CIT(A) & the tribunal have the power to give relief to the assessee & pass a judgement
But assessment is a hassle
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EWants to become is not the same as being resident. He can sell it next year after becoming one then.
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ENot that hard. Seller would have a PAN with a foreign address and assigned to a different AO who handles NRIs. I know from experience.
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FYou are being refunded the token amount along with interest. That itself is a reason for you to celebrate. Real estate industry is full of shady brokers and dealers. Most of the time, it’s a chore to even get the token money back.
As for seller not wanting to sell, he has full legal rights to back out. So nothing much you can do there. Move on to the next deal.
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AOne simple way is to check what account you are sending money. If it is NRO account then nobody can pretend anything. If they are providing resident account with resident ID then they will receive notice for capital gains.
Now if they file return as NRI then again that will be issue infact that deed will be null and void. More hassle than peace.So better take money and leave. You can ask for legal charges and all but that again will be hassle and may block your 50k as well. So think twice before anything
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SIt’s not that you don’t have any legal recourse like others have suggested. You can go for specific performance of the contract meaning you can move court seeking orders for enforcement of the contract and thereby sale of the property on mutually agreed terms of the Agreement to sale. But you need to understand that specific performance can only be awarded in certain situations and that would be totally dependent on the facts of your case. Not to forget the mental and financial toll that comes with any kind of litigation. But if you believe you have the mental wherewithal to deal with these then you should definitely move the court for specific performance. Let me know if you need any help!
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