Mohidin Properties & Holdings

Home Buyers’ Guide for Buying Property in Goa from an OCI

Several of our clients that want to buy a property in goa from an OCI (Overseas Citizen of India) face difficulties to get the documentation cleared and to actually execute the sale deed since there is no one platform, no consolidated source of information, where you can get the information about buy property in goa such as how do you file your taxes, and so on.

After speaking to different CAs, Sub-registrar, and Lawyers with each one giving their side of the story, we have gathered enough wisdom to know how to execute such sale deeds and this article is a great way to give you this information for free.

Buying Property from an OCI in Goa

Property in goa
Photo by Tierra Mallorca, Source: Unsplash

Now, many of you who have bought and sold properties will know that there’s something called TDS which is deducted on the sale of a property.

TDS is tax deducted at the source which is deducted by the buyer so if I’m buying it from you I’m deducting one per cent, if I’m buying it from an OCI I’m deducting 22.88 per cent (sometimes it varies but roughly it’s 22.88). This is under section 195 of the income tax act. 

What happens when one seller is OCI and the other seller is Indian?

What happens here is that the amount that’s going to the OCI, 22.88 %, is deducted on them and the amount that’s going to the Indian or national resident of India is one per cent.

What happens when the husband is OCI and the wife is Indian?

In this scenario, 22.88 gets deducted on the husband’s share while on the wife’s share it’s one per cent.

This covers the basic introduction.

Step-by-Step Guide to Buying Property from an OCI

Property in goa
Photo by Maria Ziegler, Source: Unsplash

Now, what is the step-by-step guide to buying a property from an OCI and getting all these taxes done because that can be quite harrowing.

1. Get a Good Lawyer

The first thing is you need a good lawyer to draft your sale deed. In the sale deed/deed of sale you will mention that the vendor is an OCI overseas citizen of India.

In the consideration column or section you will mention the total amount. For example, let’s say the total amount of the sale is one crore, TDS amount under section 195 of income tax act is 22.88 percent which works out to 22.88 lakhs.

2. Form Filling

Considering your seller is the OCI, there are no Indians involved completely, you’re buying it from an overseas citizen of India; somebody who’s living in the UK, Australia, like most Goans who have gone abroad. Considering this scenario you need to fill a form called “Form 27q”. 

Now in order to fill Form 27q, you need to go through a process. If you’re buying it from an Indian you need to fill Form 26.

Now Form 26 is very simple, you just go online, you fill it, print it out, you pay the one percent and then when you’re buying the property you attach that to the sale deed and it’s done.

Form 27q is slightly more complicated. First you need something called a TAN (Tax Deduction Account Number) number.

So when you go after that you start filling the form online, they ask you for a TAN number.

What is the TAN number? It is a tax deduction account number so the buyer needs to apply for a time number.

Now, how long does a TAN number take? your CA will do it for you. It roughly takes about two to three days right, sometimes if you’re lucky you’ll get it in 24 hours.

You need a TAN number, take that TAN number and then you can go online and you can pay your TDS, which is 22.88. 

Alternatively, if you’re not tech savvy, do the following:

  • Fill up a check 
  • Download a copy of a challan called ITNS/28 (you get that online, just print it out and fill it up)
  • Put your TAN number there
  • Add a check to it and do the needful
  • Send it to the income tax department

There are some banks in Panjim that do it. The ICICI bank, near the old passport office is where you can get that done.

Any CA will do it, they’ll charge you Rs. 1000/- to fill up the form, attach your check and do it.

We did it online because it was much easier; we got our TAN number, we filled up the challan ITNS/28 and we paid the TDS then we got form 27q saying that okay it’s all been paid for.

We took form 27q and we attached it to the sale deed saying that we’ve paid the entire amount after deduction so for example if you’re buying the property for Rs. 1 Crore, you will have to deduct Rs. 22.88 lakhs and pay the government before so whatever is left i.e. Rs. 77,12,000 is the demand draft that you have to give to the seller.

Then, you also give him the challan, you have to subsequently file your returns and you have to give him that receipt because he will take that.

So if you’re an OCI and you’ve lost that 22.88% and you’re feeling heavy, then you know that you can claim that back. Your CA will tell you that you’ll have to get evidence of these people’s returns and you have to take form 27q and then you can claim the money back.

We hope we have made this quite simple. 

What happened with one of our clients is they got the documents ready, vetted it, etc and when the time came for signing the sale deed, they realised they had all these things to do.

We hope you’ve understood it thoroughly so that you don’t have any complications when you’re reaching sale deed time.