Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
The buyer carries the default
The law puts the duty to deduct on the buyer. If they don’t, Section 201 treats them as an assessee-in-default — the department can recover the unpaid TDS from the buyer, with interest (around 1% per month) and a possible penalty. For a resident buyer who didn’t realise an NRI sale triggers Section 195, this is an unwelcome surprise.
Your own tax still stands
A missed deduction does not remove your liability: you must still compute and pay your capital-gains tax when you file your return. The TDS mechanism is only a collection method — the underlying tax is yours.
Avoiding the mess — an example
Example: a buyer pays an NRI in full without deducting, then gets a notice for the TDS plus interest months later — and may try to recover it from you, souring the deal. The clean approach is to sort it out before completion: have the buyer take a TAN and deduct correctly, ideally after you obtain a Section 197 certificate so the amount is small and certain. Building the TDS mechanics into the sale agreement — who deducts, how much, and when the certificate is produced — protects both sides and keeps the registration moving. Our NRI property service can manage the deduction for both sides.