Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
How much TDS is deducted, and on what?
Two things surprise most NRI sellers. First, TDS is deducted under Section 195 of the Income-tax Act, not the 1% rule (Section 194-IA) that applies to resident sellers. Second, it is calculated on the whole sale consideration, not only on your capital gain.
- Long-term gains (held more than 24 months): 12.5% without indexation for transfers on or after 23 July 2024, plus surcharge and 4% cess — an effective rate of roughly 13–15% depending on the value.
- Short-term gains (24 months or less): taxed at your slab rate, with TDS deducted at the maximum 30% plus surcharge and cess.
Rates and surcharge slabs change with each Finance Act — confirm the current figures for your sale before acting. You can estimate the deduction with our NRI property TDS calculator.
Who deducts it — you or the buyer?
The buyer is legally responsible for deducting and depositing the TDS. To do this the buyer must hold a TAN, deposit the tax by challan, file Form 27Q, and issue you Form 16A as proof. If the buyer fails to deduct, the liability and interest fall on the buyer under Section 201 — which is why some buyers are wary of purchasing from an NRI. Walk them through it early; see who deducts the TDS.
The real problem: TDS on the full sale price
Because TDS is taken on the gross sale value, a large amount of your money can be locked up — far more than your actual tax. You have two ways to handle it: claim the excess back as a refund when you file your return, or — better — apply in advance for a lower TDS certificate under Section 197 so the buyer deducts only on your real gain. For the full picture, see our NRI property sale & TDS guide or our NRI property sale & repatriation service.