The sub-registrar reports every property purchase of ₹30 lakh or more to the Income Tax Department. If the purchase does not match the income in your return, or you did not file one, a notice follows asking how you paid for it. For NRIs the answer is usually simple, money earned abroad, but it has to be shown with the right documents, on time.
Led by Regi Tom Antony, FCA, MBA (Australia), ACMA (UK), CGMA (USA), CISA (USA), former Group CFO/COO (OSRAM/Siemens, Westcon Group; Middle East & Africa).
An income tax notice after buying land, a flat or a house in India usually asks one question: where did the money come from. The sub-registrar reports purchases of ₹30 lakh or more to the Income Tax Department, and if your return does not explain the payment, or you did not file one, the department issues an inquiry under section 268 of the Income-tax Act, 2025 (earlier section 142(1)), or for older years starts reassessment under sections 279 to 281 (earlier sections 147, 148 and 148A). An NRI who paid from foreign earnings, NRE or NRO accounts or a home loan can normally close the notice by showing the bank trail: inward remittance records, account statements, the loan sanction letter and the sale deed. Two other points often come up: whether TDS was deducted when buying from an NRI seller, and whether the price was below the stamp duty value. Reply within the date in the notice; an unanswered notice can lead to an assessment on estimates and tax on the amount as unexplained investment, at about 78%.
The department matches information it receives with the returns it holds. A property purchase is one of the clearest signals:
Check the section quoted at the top. The reply depends on it:
| NOTICE | WHAT IT MEANS | HOW TO RESPOND |
|---|---|---|
| Section 268 (earlier 142(1)) inquiry | The assessing officer wants documents or a return, often the source of funds for the purchase. | Reply on the e-filing portal with the bank trail and an explanation, by the date given. |
| Reassessment show cause, sections 279 to 281 (earlier 147, 148 and 148A) | The department has information that income escaped assessment in an earlier year, here the property payment. | Reply to the show cause with evidence first; a good reply can stop the reassessment. |
| Notice asking you to file a return | No return is on record for the year of purchase. | File the return, then answer the source-of-funds question. |
| TDS default intimation | You bought from an NRI seller and did not deduct TDS under section 393 (earlier section 195), or deducted at 1%. | Work out the shortfall, interest and the seller's actual tax; a CA certificate may reduce the demand. |
For an NRI, the stronger the bank trail, the shorter the reply:
Money earned abroad while you were an NRI and brought into India through banking channels is not taxable in India. The notice is about proving that, not about paying tax on it.
Regi's advice: “If a tax notice arises, don't panic. Engage a CA experienced in NRI matters to handle it.”
Share the notice and the sale deed. We will tell you what it asks, which documents close it and the reply date, and set up a call in your time zone.