TDS on Sale of Property by NRI: Rates & Form 13
The single biggest cash-flow shock for NRI sellers: the buyer must deduct TDS on the whole sale price, not just your profit. Here is exactly how it works and how to cut it legally.
The Section 195 rule
On a sale by an NRI, TDS is deducted under Section 195. For long-term capital assets (property held over 24 months) the base rate is 12.5% (2024 regime) plus applicable surcharge and health & education cess — applied to the sale consideration (the full value), not merely the gain — because the buyer cannot compute your actual gain — unless a Section 197 / Form 13 certificate authorises a lower deduction. For short-term holdings, TDS is at slab rates.
Why that hurts
If you sell for a large sum but your actual gain is modest, TDS on the full value locks up far more than your real tax. You recover the excess only via an income-tax refund after filing — months later.
The fix: Form 13 lower-TDS certificate
Apply to the Assessing Officer (Form 13) for a certificate authorising TDS on your estimated gain instead of the full value. Do this before executing the deal. It is the difference between blocking lakhs and blocking only your true tax.
Buyer's obligations
- Deduct correct TDS, deposit it, and issue Form 16A.
- The buyer needs a TAN; for NRI sellers this is often overlooked and causes disputes — we brief both sides.
More NRI guides
FAQs
What is the TDS rate on property sold by an NRI?
For long-term holdings under the 2024 regime, 12.5% plus surcharge and cess, applied to the full sale value unless a Form 13 lower-TDS certificate bases it on the gain. Short-term gains are taxed at slab rates.
How can an NRI reduce TDS on a property sale?
Apply for a Form 13 lower-TDS certificate before the sale so TDS is computed on your actual capital gain rather than the entire sale value.
Does the buyer need a TAN to deduct TDS from an NRI?
Yes — deducting under Section 195 requires the buyer to hold a TAN, deposit the TDS and issue Form 16A. We coordinate this.
When should I apply for the lower-TDS certificate?
Before executing the sale — the certificate must be in hand so the buyer deducts the reduced amount at the time of payment.
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NRI Property Services hub · NRI buying guide · Selling as an NRI · NRIs & agricultural land · NRI home loans · NRI capital gains tax · Power of Attorney · Repatriating proceeds · NRE vs NRO vs FCNR · NRI property management · NRI consultant, Chandigarh
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