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 (Form 144 from 1 April 2026), and issue you Form 16A (Form 131 from 1 April 2026) 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.