Transfer of Property

[KUMAR Narasimhan]

Dear Sir / Mam,

An NRI transfer his funds ₹ 2 crore to NRO account and participated in Auction to buy a property, and transferred the amount to bank. Now the original owner of that property is requesting NRI to give back the property to him and he is ready to pay NRI ₹ 25 Lakhs for this.

Now bank will refund the 2 Crore to NRI to his saving account. In this process NRI received as Income ₹ 25 Lakhs without doing the property registration.

How to treat these transaction in Income tax Withrespect to NRI and Actual Owner of the property? Should Actual owner to deduct TDS @ 20.88% for the NRI transaction?

AI Summary

NRI's 25 lakhs from property dispute deemed 'income from other sources'; TDS at 20.8% per Section 195 required. An NRI transferred 2 crore to an NRO account to participate in a property auction. The original property owner wants the property back and offers the NRI 25 lakhs for it. The bank will refund the 2 crore to the NRI's savings account. The NRI's 25 lakhs income, without property registration, should be treated as 'income from other sources' for tax purposes. The original owner must deduct TDS at 20.8% on the 25 lakhs under section 195.