# How an NRI Claims the TDS Refund After Selling Property in India

**The buyer cut tax on your entire sale price, not on your profit, so most of what was withheld is your own money. It comes back one way only: you file an income-tax return in India, the department matches the TDS to your real tax on the gain, and it refunds the difference. This guide is the exact path, the forms, the due dates, and the realistic wait.**

## Why the buyer withheld far more tax than you owe

When an NRI sells property, the buyer deducts TDS under Section 195 of the Income-tax Act. The base for that deduction is the full sale consideration, not your capital gain. On a long-term sale the effective withholding runs to about 13 to 15 percent of the whole price, before anyone has worked out what you actually gained.

Your real tax is a fraction of that. Long-term capital gain on property is taxed at 12.5 percent without indexation since 23 July 2024, and the gain is sale price minus cost minus improvement minus transfer expenses. The tax sits on the gain. The TDS sat on the price. The gap between the two is your money, and it stays with the Income Tax Department until a refund reaches you. The mechanics of the deduction itself are covered in the [TDS on sale of property by an NRI guide](/guides/tds-on-sale-of-property-by-nri), and the gain computation in the [capital gains tax on NRI property guide](/guides/capital-gains-tax-nri-property).

## How do I get my TDS refund?

You claim it by filing an income-tax return for the year of sale. There is no separate refund application and no way to recover the excess without a return. The return computes your tax on the gain, sets the TDS already deducted against it, and the surplus becomes a refund credited to your bank account.

The sequence is fixed. Follow it in order.

| Step | What you do | When |
| --- | --- | --- |
| 1 | Collect Form 16A from the buyer, showing the TDS deducted and deposited under Section 195 | After the buyer files Form 27Q for the quarter of sale |
| 2 | Check Form 26AS and the Annual Information Statement (AIS) on the e-filing portal so the TDS shows against your PAN | Before you file, once the buyer's return is processed |
| 3 | Compute the capital gain and the tax on it | Before filing |
| 4 | File ITR-2 on incometax.gov.in, reporting the gain and claiming the full TDS as credit | By 31 July 2026 for the sale year FY 2025-26 |
| 5 | E-verify the return | Within 30 days of filing |
| 6 | Receive the refund in a pre-validated bank account linked to your PAN | After the return is processed |

Miss the verification and the return is treated as never filed, so the refund never starts. Verification is the step people forget from abroad.

## Which ITR form do NRIs use?

ITR-2. It is the return for individuals with capital gains and no business income, which is the NRI property seller's exact situation. ITR-1 does not carry a capital-gains schedule, so it cannot report a property sale. If you also run a business or profession in India you move to ITR-3, but a one-off property sale does not put you there.

Inside ITR-2 the gain goes in Schedule CG, the TDS goes in Schedule TDS, and your residential status is declared as non-resident. The portal pulls your TDS entries from Form 26AS and AIS into the return; you confirm they match Form 16A before you submit.

## How do I reconcile the TDS: Form 26AS, AIS, and Form 16A

Three records must agree before you file, or the department holds the refund.

Form 16A is the TDS certificate the buyer issues you after depositing the tax and filing Form 27Q. It states the amount deducted, the section, and the deposit challan. Form 26AS is the department's own tax-credit statement against your PAN; the same TDS must appear there. The AIS is the wider statement that also captures the sale transaction reported by the registrar. All three should show the same deducted figure.

The common failure is the buyer quoting the wrong PAN, or deducting under Section 194-IA at 1 percent as if you were a resident. If the buyer used the wrong section or a wrong PAN, the credit does not reach your 26AS and you cannot claim it. Fix it with the buyer before filing, not after. Chase Form 16A early, because the buyer often issues it late and you cannot verify the credit without it.

## When is the return due, and how do I verify it?

For a sale in FY 2025-26 the return is due by 31 July 2026 for a non-audit individual filing ITR-2. File after the due date and you can still claim the refund through a belated return up to 31 December of the assessment year, but you lose part of the interest the department pays on a delayed refund.

E-verification closes the loop. An NRI verifies through net banking, or with an Aadhaar OTP where an Aadhaar is linked, or by sending a signed ITR-V by post to Bengaluru. Do it inside 30 days. The refund clock only starts once the return is verified.

## Where does the refund get credited?

Into an Indian bank account that you have pre-validated on the e-filing portal and linked to your PAN. A refund cannot be sent to a foreign account. In practice this means your NRO account, which is the account that already holds the sale proceeds. Pre-validate it before you file, because an unvalidated account stalls the refund even after the return is processed.

Once the refund lands in the NRO account it sits with the rest of your sale proceeds, and moving it abroad runs on the FEMA repatriation rules. The [repatriating sale proceeds guide](/guides/repatriating-property-sale-proceeds-nro) covers the USD 1 million window and the Form 15CA and 15CB paperwork each transfer needs.

## How long does the refund take?

For a clean return the department processes most refunds within a few weeks of e-verification, often inside 15 to 45 days. Treat that as the best case, not the norm for a large Section 195 refund.

NRI property refunds are large and they draw manual review. A refund of several lakh, arising from TDS on a full sale value, is often held for scrutiny and can take several months, and cases stretch past a year where the return is picked for detailed processing. The department pays interest under Section 244A at 0.5 percent per month on a delayed refund, so the wait is compensated, but it is still your capital locked for a year or more. That single fact is the whole argument for the Section 197 certificate below.

## Can an NRI claim DTAA relief or foreign tax credit here?

This is where sellers get the direction wrong. The gain on Indian property is India-source income, taxed in India, so there is no Indian tax to relieve away under a treaty on this income. The credit flows the other way. You claim the Indian tax you paid as a foreign tax credit on your tax return in your country of residence, using Form 16A and your Indian assessment as proof.

Form 67 is India's form for a resident claiming credit for taxes paid abroad. It is not the NRI property seller's form on this income. It becomes relevant only if you are filing this year as a resident or RNOR, for example a returning NRI, and are offsetting some foreign tax. Where the treaty does the work is at deduction time: a Tax Residency Certificate plus Form 10F given to the buyer can bring the withholding to the treaty rate. Keep the certificate and the assessment order; your home-country return will ask for them.

## The move that skips the wait: a Section 197 certificate before you sell

Everything above is the cleanup after the buyer has already withheld too much. The way to not need the cleanup is to stop the over-withholding at source. Section 197 lets you apply for a Lower or Nil Deduction Certificate that directs the buyer to deduct TDS on your actual gain instead of the full sale price. Get it, and the withholding drops close to your real tax, so there is little or nothing to refund and nothing to wait for.

Two conditions decide it. You apply before the sale, because the certificate has to exist when the buyer deducts. And you file the application on the right form, which runs through the TRACES portal and takes weeks to issue. The [lower TDS certificate guide](/guides/lower-tds-certificate-form-13-nri) walks the application. The choice is stark: a certificate filed early, or your capital parked with the tax department for a year while a refund grinds through. The certificate is the better trade almost every time.

## FAQ

**Can an NRI get a TDS refund without filing an ITR?**
No. The excess TDS the buyer deducted under Section 195 is recoverable only through an income-tax return. There is no standalone refund application. You file ITR-2 for the year of sale, report the gain, set the deducted TDS against your real tax, and the surplus is refunded to your pre-validated bank account.

**Which ITR form does an NRI file to claim the refund?**
ITR-2. It carries the capital-gains schedule that a property sale needs, which ITR-1 lacks. The gain goes in Schedule CG and the TDS in Schedule TDS, with residential status declared as non-resident. You move to ITR-3 only if you also have business or professional income in India, which a one-off sale does not create.

**How do I make sure the TDS shows against my PAN?**
Check Form 26AS and the AIS on the e-filing portal before you file, and match both to the Form 16A the buyer issues. If the buyer quoted the wrong PAN or deducted under the resident 1 percent section, the credit will not reach your 26AS. Fix that with the buyer first, because you cannot claim credit the department cannot see.

**How long does an NRI TDS refund take?**
A clean return is often processed in 15 to 45 days after e-verification. Large Section 195 property refunds draw manual review and routinely take several months, sometimes past a year. The department pays interest at 0.5 percent per month under Section 244A on the delay, but your capital stays locked meanwhile.

**Which account does the refund get credited to?**
An Indian bank account, pre-validated on the portal and linked to your PAN, which for an NRI is normally the NRO account. A refund cannot be paid to a foreign account. Pre-validate the account before you file, or the refund stalls even after the return is processed.

**How do I avoid the refund wait entirely?**
Apply for a Section 197 Lower Deduction Certificate before you sell. It directs the buyer to deduct TDS on your actual gain rather than the full sale price, so almost nothing is over-withheld and there is little to reclaim. It takes weeks to issue, so start it before the sale closes, not after.

## Compare and cost

- [The NRI Property Management Companies in India: A Comparison You Can Check](/guides/best-nri-property-management-companies-india)
- [What NRI Property Management Costs in India: The Four Models and What Hides in Each](/guides/nri-property-management-cost-india)
- [NoBroker NRI Services Review: What the Pages Promise and What They Leave Out](/guides/nobroker-nri-services-review)

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Source: [https://66mgroad.com/guides/nri-tds-refund-itr-filing-property-sale](https://66mgroad.com/guides/nri-tds-refund-itr-filing-property-sale) · 66 MG Road. Full LLM brief: https://66mgroad.com/llms.txt