Services >> International Taxation >> Tax Residency Certificate (TRC), Foreign PAN, Assistance in return filing for foreign PAN

Tax Residency Certificate (TRC)

According to Section 195 of the Income Tax Act, When any person purchases an immovable property from a non-resident, TDS is required to be deducted on the amount of the capital gain and not on the sale proceeds arising to such non-resident.

In most of the cases, such non-resident would be a Non-resident Indian. If the buyer purchase from resident seller, TDS is deducted only when consideration > 50 lakhs but this threshold limit is not available if the seller is NRI.  Hence the buyer has to deduct TDS even if consideration is < 50 Lakhs.

If the immovable property is held for more than two years, then there would be ‘Long Term Capital Gain’ and TDS would be deducted at the rate of 20% (plus Surcharge as applicable and Cess) and in case the property is held for two years or less than two years, then there would be ‘Short Term Capital Gain’ and TDS would be deducted at the applicable Income Tax Slab Rate (plus Surcharge as applicable and Cess).

TDS can be deducted at a lower rate or nil rate in the case of purchase of property from NRI. For this the NRI should have lower deduction/Nil rate of deduction certificate. By filing Form 13 with Income tax dept. the NRI seller can obtain Nil/Lower deduction certificate. The AO will issue Nil/ Lower Deduction certificate within 30 days from the end of the month in which application is received. Go for filing form 13 at least 40 -60 days prior to the proposed date of registration of the said property.

Obtaining this Nil/Lower certificate requires calculating capital gains, taking advantage of indexation benefits, determining the cost of acquisition, and completing the computation via Form 13 with the department, all of which are challenging tasks. Always seek the advice of a professional in this matter.

Right from filing an application for PAN and lower deduction certificate to filing your returns, you can avail our service. We would advise you the right thing to do.  In case you are an NRI and TDS has already been deducted, don’t worry. We can compute the capital gain, file your returns and get you the refund, if any.

Taxation of Expatriate

In the Indian context, an expatriate is a foreign national working in India (inbound) or a national of India working overseas (outbound). The work requirement for expatriates is dependent on whether the assignment is a:

An inbound expatriate is liable to bear taxes in India for the income received on rendering his services in India, subject to exemptions provided under the Income Tax Act and the Double Taxation Avoidance Agreement (DTAA).

An inbound expatriate should be aware of many compliances. Several of them include:

Majority of the inbound expatriates are salaried employees in India. If you are an inbound expatriate then you should know about the tax exemptions of the components in your salary structure. You should also be aware of the social security obligations in India.

We are here to help you save taxes and not let you be penalised for any default.

Equalization Levy​

When a service recipient pays a non-resident for services like online advertisements, any provision for digital advertising space, facilities or services related to online advertisement. a direct tax known as the equalisation levy is levied. Equalization levy which was introduced on 1.6.2016, is applicable only when the aggregate amount of consideration does not exceed Rs. 1 lakh in the financial year.

It shall be charged at the rate of 6% after grossing up the amount of consideration received or receivable by a non- resident from a person resident in India and carrying on business or profession; or a non- resident having a permanent establishment in India.

The scope of Equalization levy was further extended in Finance Act 2020, by bringing into the bracket the e-commerce supply of goods and services.

It shall be charged at the rate of 2% of the amount of consideration received or receivable by an e commerce operator from e commerce supply of goods and services made by it to a person resident in India or to a non-resident in the specified circumstances; or to a person who buys such goods/services using internet protocol address located in India.

However, the levy shall not be applicable if –

Time of deposit shall be 7th day of month following the month in which the equalisation levy is deducted. The equalisation levy shall be paid by every e commerce operator to the credit of government quarterly within 7h of the month following the quarter end, however for the quarter ending 31st March, the payment should be made within 31st March. Along with this an annual statement in the prescribed from should be filed within the stipulated date.


If you are a service recipient or e-commerce operator to whom this levy is applicable and worried about this compliance, we are of help. Avail our service and we would not let you regret.

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