Can the buyer deduct TDS only on my profit instead of the full sale price?

CA Vijay R Singh, FCA
Chartered Accountant · ICAI M.No. 153926 · FRN 136869W

Short answerNot on their own — by default the buyer must deduct under Section 195 on your whole sale value. But you can change that by getting a lower TDS certificate under Section 197 (Form 13) in advance, which directs the buyer to deduct only on your actual capital gain.

The default: TDS on the full price

Left to the standard rule, the buyer has no choice — Section 195 requires deduction on the entire sale consideration, even though your taxable gain may be a fraction of it. That is why so much cash gets locked up.

The fix: a Section 197 certificate

You apply in advance on Form 13 for a certificate under Section 197. The Assessing Officer reviews your expected gain and issues a certificate telling the buyer to deduct only on that gain — or nothing, if you are reinvesting under Section 54/54EC. The buyer then deducts the lower amount with confidence.

A worked example

Example: sale ₹1.2 crore, gain ₹25 lakh. Without a certificate, TDS is on ₹1.2 crore (₹15 lakh+). With a Section 197 certificate, it is on ₹25 lakh only (about ₹3 lakh) — freeing roughly ₹12 lakh. Apply before you register the sale, as it takes a few weeks, and remember the certificate is buyer-specific — if your buyer changes after you have applied, you must file a fresh Form 13. Timelines vary by office — confirm and plan ahead. Our NRI property service files the Form 13 for you.

NRI Taxation

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This answer is general information for NRIs, not tax advice. Tax rates, thresholds and forms change with each Finance Act — please confirm the current position for your own facts, or speak to us, before acting.