Is TAN number required before registry of purchase of an NRI property?

Is it necessary to obtain a TAN number before registry of purchase of an NRI property? Can we deduct the amount at prescribed rate and post registry deposit this once we get our TAN as NRI has to leave urgently and TAN can’t be generated in this time. Parag Agrawal

As per Section 195 of Income Tax Act, a person is required to deduct tax at rates in force while making any payment of any amount to a non-resident which is taxable in India. For purchase of property from a resident, buyer of property is also required to deduct tax at 1% in case the sale consideration exceeds 50 lakhs but he is not required to obtain TAN (Tax deduction Account Number) but when the payment is being made to a non-resident he has to obtain TAN number for the purpose of deposing the tax so deducted to the credit of the central government. 

Since you are buying a property from a non-resident you are required to have a TAN number but only at the time of making payment of the tax deducted to the credit of the central government and not when you execute and register the agreement. The tax so deducted from payment made to a non-resident is required to be deposited to the credit of the central government by 7th of the next month in which the tax is deducted. In case tax is deducted during the month of March, you can deposit the same by 30th April. The tax is required to be deducted if any advance payment is made to the non-resident seller else the same can be deducted at the time of execution of the sale deed on the full consideration even if full payment is not being made at the time of execution of the sale agreement.

After deposit of the TDS to the credit of the central government you are required to file a TDS return also in form no. 27Q within prescribed time. In case the TDS is deducted during the March quarter, you have to file the TDS return by 31st May 2022 and in case the TDS is deducted during the month of April 2022, you can file the TDS return by 31 July 2022. 

You can apply for TAN in form no. 49B on line. I am sure you will get the TAN number before the due date of payment of the TDS. Even if TAN is not allotted to you by the due date of payment, you can deposit the TDS after the due date but you may have to pay interest for the delayed payment.

Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant on Twitter.