Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Two different sections
For a resident seller, Section 194-IA applies a flat 1% TDS on sales above ₹50 lakh — a small, easily-recovered amount. For an NRI seller, Section 195 applies instead, requiring the buyer to deduct at the actual capital-gains rate — a fundamentally different and much higher basis.
Rate and base both differ
Not only is the rate higher (12.5% for long-term, slab/30% for short-term, plus surcharge and cess), it is applied to the whole sale value, not just your gain. So the cash held back can be many times the 1% a resident would face. Confirm current rates and surcharge for your sale.
What you can do — an example
Example: on a ₹1 crore sale, a resident loses ₹1 lakh (1%) of cash flow, while an NRI can have ₹13 lakh+ held back. You bring it back down by applying for a lower TDS certificate under Section 197 so deduction is only on your real gain, or by reclaiming the excess when you file. The 1% resident rule and the Section 195 NRI rule are genuinely different regimes, not a difference of rate — which is why a buyer purchasing from an NRI should never simply deduct 1% and assume it is handled. Our NRI property service handles it.