House for sale Most options seem to be covered by the signs.
By , founder·12 min read·Published 2026-06-11·Updated 2026-10-12

Short answer: When an NRI sells property in India, the buyer deducts TDS on the full sale price, not on the gain and not at 1%. Held more than 24 months: 13%, 14.3% or 14.95% (12.5% plus surcharge capped at 15% plus 4% cess). Held 24 months or less: 31.2%, 34.32%, 35.88% or 39% (30% plus surcharge plus cess). The band turns on the sale price. The rule is section 393(2), Table S.No. 17 of the Income-tax Act, 2025, old section 195. A Form 128 certificate cuts the deduction to the tax on the real gain.

TDS on Sale of Property by an NRI: How Much the Buyer Deducts, and the Form 128 Fix

When an NRI sells property in India, the buyer deducts TDS on the full sale price under section 393(2), Table S.No. 17 of the Income-tax Act, 2025 (old section 195). For property held more than 24 months the rate is 13%, 14.3% or 14.95% of the price. For property held 24 months or less it is 31.2%, 34.32%, 35.88% or 39%. The band turns on the sale price. Not 1%. Not on the gain. A lower-deduction certificate on Form 128 is the one way to cut it before the money moves.

Have your own CA or lawyer read this against your papers before you act on it. We report the rule. The person who has seen your position is the one who can tell you what it means for you.

Work your own number first. The NRI property sale TDS calculator takes the sale price, the holding period and your residency status and returns the rate the buyer must deduct, plus what a lower-deduction certificate would save you.

Why this is not the 1% TDS everyone knows

Resident sellers fall under section 194-IA: the buyer deducts 1% of the price. That section excludes non-resident sellers by design. The moment the seller is an NRI, the deduction shifts to section 195, which covers all payments to non-residents. Two numbers change:

  1. The rate jumps from 1% to the tax rate on the gain, plus surcharge and cess.
  2. The base becomes the full sale consideration, because the buyer has no legal way to compute the seller's gain.

The Finance (No. 2) Act, 2024 cut the long-term capital gains rate on property to 12.5% without indexation for transfers on or after 23 July 2024. Section 197(1) of the Income-tax Act, 2025, in force from 1 April 2026, carries the same rate forward. The option to compute at 20% with indexation on land or buildings bought before 23 July 2024 sits in section 197(3), and it is open to residents only. An NRI seller does not get it.

How much TDS when an NRI sells property in India: the rate table

Table S.No. 17 of section 393(2) says "rates in force". Part II of the First Schedule to the Finance Act, 2026 sets them for a non-resident Indian: 12.5% on long-term capital gains, and 30% on "the whole of the other income", which takes in short-term gains on property. Surcharge runs on the amount paid or likely to be paid, which is the sale price. On long-term gains under section 197 it is capped at 15%. Section 2(16) of the same Act adds 4% cess on tax plus surcharge.

Sale price Held over 24 months Held 24 months or less
Up to Rs 50 lakh 13.00% (12.5%, no surcharge) 31.20% (30%, no surcharge)
Rs 50 lakh to Rs 1 crore 14.30% (10% surcharge) 34.32% (10% surcharge)
Rs 1 crore to Rs 2 crore 14.95% (15% surcharge) 35.88% (15% surcharge)
Above Rs 2 crore 14.95% (15% cap holds) 39.00% (25% surcharge)

A seller who has opted out of the new tax regime under section 202 faces 37% surcharge on a short-term sale above Rs 5 crore, an effective 42.74%. The long-term rate stays at 14.95% at any price. Some guides print 16.25% or 17.81% for long-term sales above Rs 2 crore. Part II of the First Schedule caps surcharge on capital gains under sections 196, 197 and 198 at 15%, so those figures do not follow from the text.

Worked example: Rs 1.8 crore sale

A flat bought for Rs 1.5 crore and sold three years later for Rs 1.8 crore. The seller has no other Indian income and no certificate.

Item Amount
TDS at 14.95% of Rs 1.8 crore Rs 26,91,000
Actual gain Rs 30,00,000
Tax at 12.5% on the gain, no surcharge below Rs 50 lakh income, plus 4% cess Rs 3,90,000
Excess withheld Rs 23,01,000

The seller recovers the Rs 23 lakh through a return and a refund. With a Form 128 certificate set at the tax on the gain, the buyer deducts about Rs 3.9 lakh and the rest reaches the seller at registration.

The buyer's compliance load

The buyer, not the seller, carries the legal duty. What the buyer files turns on who the buyer is and when the payment is made. The Income-tax Rules, 2026 renumbered the forms: old Form 27Q is Form 144.

Resident individual or HUF buyer, payment on or after 1 October 2026:

  1. No TAN application. Section 87 of the Finance Act, 2026 removes that duty for this transaction. A buyer who already holds a TAN still quotes it.
  2. Deduct the correct rate on each payment, including the advance and each instalment.
  3. Deposit the TDS with the Form 141 challan-cum-statement within 30 days from the end of the month of deduction, under the transaction option for a transfer by a non-resident, with Schedule E filled in.
  4. Issue Form 132 to the seller within 15 days from the date the Form 141 is due.

Company, firm, LLP or trust buyer: obtain a TAN before the first deduction, deduct on each payment, report on Form 144, and issue Form 131 (old Form 16A) within 15 days from the Form 144 due date. The notifications we cite do not restate the deposit dates for this route, so the buyer's CA confirms them.

Payments up to 30 September 2026: the old rule held. Every buyer needed a TAN and reported on the quarterly non-resident statement, Form 27Q, now Form 144.

What you hand a resident buyer for Schedule E. The buyer cannot complete Form 141 alone. Give them, in writing, before the first payment: your PAN if you have one, name, status, contact number, email id, address in the country where you are resident, tax residency certificate number, foreign tax identification number, your share of the consideration, and the number of any section 395(1) certificate you hold. Note 6(a) to Form 141 makes the contact number, email id and overseas address compulsory whether or not you have a PAN. Note 6(b) requires the tax residency certificate number and foreign tax identification number where you have no PAN, so that tax is not deducted at a higher rate.

Buyers who skip any step face interest, late fees, and "assessee in default" proceedings. Sellers should care because the withheld money is theirs, and a buyer who deposits late or files a wrong form delays the seller's credit. If you are the one buying from an NRI, the full duty (and why it is Form 141 or Form 144, never Form 26QB) is in the buyer's TDS guide.

Form 13, now Form 128: the lower or nil TDS certificate

The law has a pressure valve. Section 197 of the old Act, now section 395 of the Income-tax Act, 2025, lets the seller apply for a certificate directing the buyer to deduct at a lower rate, or nil, matched to the actual gain. The application form was Form 13. Under the 2025 Act it is Form 128. The Finance Act, 2026 added section 395(6), which puts the application route on an electronic footing.

The walkthrough:

  1. Get your documents ready: PAN, passport, purchase deed with cost proofs, the agreement to sell or a draft with the negotiated price, the buyer's name, PAN, and TAN if the buyer holds one, your gain computation, and your prior return filings.
  2. Register on the TRACES portal as a taxpayer and file Form 128 (Form 13) online for the relevant year, naming the buyer as the deductor.
  3. The jurisdictional assessing officer for international taxation reviews the computation. Expect queries: proof of acquisition cost, inheritance documents, bank statements.
  4. The officer issues a certificate stating the rate the buyer must apply. It is buyer-specific and amount-specific.
  5. Hand the certificate to the buyer before any payment. Deductions made before the certificate date do not get the benefit.

Timelines run three to eight weeks depending on the city and the officer's queue. File as soon as a price is agreed. Do not wait for the sale deed date.

One candid note. Many CAs have never filed a Form 13. It is a niche, officer-facing process with city-specific practice. Ask your CA how many certificates they obtained in the last twelve months before you hand them your deal.

The refund route, if TDS was over-deducted

If the sale closed without a certificate, the excess is not lost. It is slow.

  1. Confirm the buyer deposited the TDS and filed the statement. Check your 26AS for the credit.
  2. File your Indian income tax return for the year of sale, computing the actual gain and claiming exemptions.
  3. The excess TDS becomes a refund claim. Refunds for NRI sellers tend to arrive six to eighteen months after filing, with interest under the refund provisions.
  4. The refund lands in your pre-validated Indian bank account, then needs its own repatriation paperwork: see repatriating proceeds from NRO.

A certificate before the sale beats a refund after it, every time.

Where this goes wrong

  • The buyer deducts 1% under section 194-IA because the broker never disclosed the seller's NRI status. The department later treats the buyer as in default for the shortfall, with interest. Deals have unravelled in litigation over this.
  • A company or firm buyer has no TAN on the day the advance is paid. The advance itself needed deduction.
  • TDS is deducted on the registered value while part of the price moved earlier as an advance without deduction.
  • The Form 128 application starts after registration is booked. The certificate arrives after the money has already been withheld at the full rate.
  • The buyer deposits TDS under the wrong section code. The credit never appears in the seller's 26AS, and the seller spends months on correction statements.

Where to find one

66 MG Road keeps a directory of verified chartered accountants who work with NRI clients. Everyone in it applied and had their registration and record checked before the listing went live. Browsing is free and we take no cut of any engagement.

When an NRI searches this, the answers that come back tend to cite NoBroker and ClearTax rather than anyone who has run a sale for a non-resident. Both are worth reading. Neither will file the Form 13 application for you.

FAQ

How much TDS is deducted when an NRI sells property in India? On the full sale price. Held more than 24 months: 13% up to Rs 50 lakh, 14.3% up to Rs 1 crore, and 14.95% above that. Held 24 months or less: 31.2%, 34.32%, 35.88%, and 39% above Rs 2 crore. The buyer deducts it under section 393(2), Table S.No. 17 of the Income-tax Act, 2025, unless the seller hands over a Form 128 certificate.

Is TDS calculated on the sale price or the capital gain? On the full sale price, unless the seller obtains a certificate under section 197 (now section 395) authorising deduction on the gain or at a lower rate.

Does the buyer need a TAN to buy from an NRI? From 1 October 2026, not if the buyer is a resident individual or HUF. Section 87 of the Finance Act, 2026 removes the duty to apply for one, and the buyer deposits and reports on Form 141 within 30 days from the end of the month of deduction. A company, firm, LLP or trust buyer still needs a TAN and files Form 144. For payments up to 30 September 2026, every buyer needed a TAN.

How long does a lower-TDS certificate take? Three to eight weeks in most cities. File Form 128 (old Form 13) as soon as the price is agreed in principle.

Can the certificate cover an advance already paid? No. It applies from its date of issue. Sequence the payments after the certificate.

What if the buyer deducted only 1%? The liability for the shortfall sits on the buyer, but the seller's repatriation and refund position gets tangled. Fix it through a correction and a top-up deposit before registration if caught in time.

Is TDS the final tax? No. The actual tax is computed in your return. TDS is an advance collection. Excess comes back as a refund; shortfall is payable with interest.

Get the TDS right before the deal signs

66 MG Road manages the full sale-side sequence for NRI owners: Form 128 application, buyer TDS compliance, registration through POA, Forms 145/146, and repatriation. Teams in Delhi NCR and Bangalore. Itemized billing. See sale and purchase services.

Saurabh Garg, founder, 66 MG Road

Sources

Information on this page is as on 2026-10-12. Rules, rates, deadlines and government portals change without notice, so verify against the official source before you act. This page is for information only. It is not tax or legal advice, and it is not a substitute for a qualified adviser who knows your position.