Is there a late filing penalty for Form 13?
There is no filing deadline to miss in the way there is with a return, because this is an application for permission rather than a return of income. The cost of being late is commercial rather than penal. Once a payment has been made, deduction has already been taken at the default rate, and a certificate cannot reach backwards to undo it. So the consequence of delay is that your money sits with the department until you claim it on a return, which is the difference between financing a refund for a year and receiving the correct amount at closing.
I have already completed the sale — can I still apply?
An application made after the last payment has nothing left to act on, because the certificate tells a payer what to deduct from payments still to come. Where the consideration is payable in instalments it is a different matter: applying part way through cannot recover what has gone, but it stops the same over-deduction repeating on the balance. Once every rupee has been paid and deducted from, the route is the return for that year, with the gain computed on a net basis and the excess claimed back.
How long does it take to get the over-deducted money back?
Long enough that it changes how people plan a sale. Recovery runs on the return cycle for the year in which the deduction was taken, so an amount withheld early in a year is claimed only after that year closes, and then waits on processing. That is why the certificate is better treated as part of the transaction than as tax administration. If the deduction has already happened, the useful work is making the claim clean first time: the cost of acquisition evidenced, improvement spending vouched, and the deduction traced to the payer's own filings.
Does the buyer get penalised because I applied too late?
The buyer's position has nothing to do with the timing of your application. A payer who deducts at the default rate in the absence of a certificate is doing exactly what is required and is safe. The risk for a payer runs the other way, in deducting less than the default without an authorisation to support it. That is why a buyer will rarely reduce a deduction on the strength of your own computation, however well documented. Your delay costs you the timing of your own money; it does not create an exposure for them.
Can I apply for a certificate for a year that has already ended?
The certificate governs deduction at the time of payment, so an application for a year in which all the payments have been made and deducted from has no work left to do. For a closed year the instrument that corrects an excessive deduction is the return, not the certificate. Where receipts continue into the current year, whether rent, fees, interest or instalments of a sale price, the sensible course is to leave the closed year to the return and apply now, so that the same thing does not happen again.
Should I delay completion until the certificate arrives?
That is a commercial decision rather than a tax one, and we set it out as a trade-off rather than advising delay. Holding completion means the deduction is taken at the authorised rate and the transaction closes clean. Completing first means deduction on the whole consideration, with you carrying the excess until the return is processed. Where a sale cannot wait, the middle course is to look at the timing of the instalments, so that the payments still outstanding when the certificate issues are large enough to be worth covering.
How do I report the sale of a foreign property?
On your residence-country return, as a disposition, with proceeds and cost base converted at the rates for their own dates. Separately, the country where the property sits may require its own return and may hold back tax at closing until a clearance or certificate is issued — Canada does this for a non-resident vendor, and the United States withholds on a foreign seller of US real property. Those steps have their own deadlines, often before closing. See clearance certificates on a property sale.
How do I claim tax treaty benefits?
Two moments, and the earlier one matters more. Before a payment is made, you give the payer a declaration so they withhold at the treaty rate rather than the domestic one — a W-8BEN for a US payer, an NR301 for a Canadian payer, a residency certificate and Form 10F for an Indian one. After the year ends, you claim the position on a return, and the United States often wants it disclosed there in its own right. Claiming late means asking for a refund instead. See NR301 declarations.
