Why is tax deducted on the whole sale price and not my gain?
Because the deduction is applied to the consideration the buyer pays, not to the profit you actually make. The buyer has no way of knowing what the property cost you, so the system takes its cut off the top and leaves the arithmetic to be settled later. On an older flat bought long ago, that routinely holds back far more cash than the sale will ever owe in tax. The gap is not a penalty and it is not lost. It is your money sitting with the department until a return is filed and the position is reconciled.
Can I get the deduction reduced before my flat sale closes?
Yes, and it is the only step that changes what happens at the table. A lower-deduction certificate is applied for ahead of the sale, on the basis of what the gain will actually be, and it tells the buyer to deduct against that figure rather than the default. Obtaining it needs the purchase trail, evidence of improvement spending and the draft agreement, all of which take time to assemble, so the application wants to start while the deal is still being negotiated. Once the deed is signed that route has closed and only a refund claim is left.
What if the buyer deducts the tax but never deposits it?
Your credit depends on the deduction being deposited and reported against your name, not on the buyer having taken it out of the price. If the reporting never happens, the money has left your hands and the record shows nothing, which is why we ask to see the deposit evidence rather than the completion statement. The correction has to come from the buyer, and it is far easier to obtain while the buyer still wants something from you. Chase it before the keys change hands, and keep the deposit receipt and the deduction certificate with the sale papers.
How do I get back tax that was over-deducted on the sale?
By filing an Indian return for the year in which the sale falls and claiming the difference as a refund. India's year runs April to March, so a sale in the second half of the calendar year sits in an Indian year that closes after the Canadian one, and the refund usually arrives in a later foreign tax year than the sale itself. That timing matters for the credit you claim at home, because the two systems are being lined up by hand. Expect the Indian filing to be a reconciliation exercise rather than a fresh computation.
Does my Canadian citizenship change how much is deducted on the sale?
What drives the deduction is your residence status at the time of the sale, not the passport you hold or the address printed on the title deed. A buyer dealing with a seller who is outside India deducts on the consideration; a buyer dealing with a resident seller is not in the same position. This is why status has to be settled and evidenced before the agreement is drafted rather than argued about afterwards. If the paperwork shows the wrong status, the deduction follows the paperwork, and the correction turns into a refund claim that takes months.
I inherited the property, so what cost is taken into account?
The deduction itself takes no account of cost at all, which is exactly the difficulty with inherited property: it runs on the price the buyer pays. Cost only enters the picture when the real gain is computed, either in the certificate application before the sale or in the return afterwards. That means finding the original purchase deed, the transfer or probate papers, and receipts for work done over the years, often reaching back a generation. Families rarely have this filed neatly. Reconstructing the trail is usually the longest part of the job, so start it early.
Can I set up a trust that works in two countries?
You can, but the two systems classify and tax trusts differently enough that a structure which is efficient in one is often a reporting problem in the other — a Canadian family trust with a US beneficiary, or a US revocable trust holding Canadian property, are the classic pairs. Canada's twenty-one-year deemed disposition, the US grantor rules and each country's reporting have to be read together, before drafting rather than after. See cross-border wills and trusts.
What is withholding tax?
Tax the payer deducts and remits before you receive the money, so collection does not depend on the recipient filing. On cross-border payments — dividends, interest, royalties, rent, pensions, fees for services — it is charged at a statutory rate on the gross amount, which a treaty often reduces. Because it is computed on gross rather than net, the amount withheld frequently exceeds the real tax, and an elective return or refund claim recovers the difference. See withholding review.
