Quick answer
How much TDS is deducted when an NRI sells property in India?
TDS on sale of property by NRI is deducted at the rates in force for the seller's gain: for a long-term gain, 12.5% plus surcharge and 4% cess for sales from 23 July 2024; for a short-term gain, the applicable rate is usually much higher. A lower deduction certificate in Form 128 can bring TDS down to the actual tax.
- The 1% resident-seller rule does not apply to NRI sellers
- Property held over 24 months gives a long-term gain
- From 1 October 2026, individual and HUF buyers need no TAN
- Apply for Form 128 before the sale deed is registered
How does TDS on sale of property by NRI differ from a resident sale?
When the seller is resident, the buyer deducts a flat 1% on property worth ₹50 lakh or more. When the seller is an NRI, the buyer must deduct tax under the non-resident provisions at the rates in force, with no ₹50 lakh threshold, so the amount withheld is far larger.
The law sits in section 195 of the Income-tax Act 1961 and, from 1 April 2026, in section 393(2) (Table serial 17) of the Income-tax Act 2025. The resident-seller process is explained in our guide to TDS on purchase of property; this page covers the non-resident side.
| Point | Resident seller | NRI seller |
|---|---|---|
| Rate | 1% of the price | Rate in force on the gain, plus surcharge and cess |
| Threshold | Only if price is ₹50 lakh or more | No threshold |
| Buyer's form | Form 141 Schedule B (earlier 26QB) | Form 141 Schedule E for individual or HUF buyers from 1 October 2026; TAN-based return otherwise |
| Lower rate possible | No | Yes, with a Form 128 certificate |
Source: e-filing portal FAQs on Form 141, checked November 2026.
What are the TDS rates for an NRI property sale in 2026?
The rate depends on how long you held the property. Held for more than 24 months, the gain is long-term and the rate for sales from 23 July 2024 is 12.5% without indexation, plus surcharge and 4% cess. Held for 24 months or less, the gain is short-term and taxed at the rates in force for the seller.
| Holding period | Type of gain | Base rate | Added on top |
|---|---|---|---|
| More than 24 months | Long-term | 12.5% without indexation | Surcharge (capped at 15% for long-term gains) and 4% cess |
| 24 months or less | Short-term | Rate in force for the seller | Surcharge and 4% cess |
| Seller has no valid PAN | Either | Higher rate under section 397(2) | Unless foreign address, TRC and tax ID are given |
Sources: CBDT FAQs on capital gains (PIB); e-filing portal pages on surcharge and Form 141 Schedule E. Checked November 2026.
Need help with TDS on sale of property by NRI? Talk to a chartered accountant in Delhi today. First call is free.
NRI property sale tax: why the TDS is often higher than the real tax
NRI property sale tax is the tax on your actual gain, but many buyers deduct on the whole sale price because they cannot verify your cost. On a ₹1 crore sale, 12.5% of the full price is ₹12.5 lakh before surcharge and cess, even if your real gain is a fraction of that.
Three more reasons the deduction overshoots:
- Non-residents cannot use the 20% with indexation option that resident individuals get for property bought before 23 July 2024, so cost and timing need careful working.
- Exemptions you plan to claim, such as buying another house under section 54 or 54EC bonds, are not visible to the buyer.
- Joint sellers, inherited property and old allotments complicate the cost the buyer would have to accept.
The fix is either a lower deduction certificate before the sale or a refund claim in your Indian ITR after the year ends. The certificate keeps the money in your hands now.
How do you get a lower deduction certificate (Form 128)?
The NRI seller applies to the Assessing Officer on the TRACES portal in Form 128, which replaced Form 13 from 1 April 2026 under section 395(1). The officer issues a certificate with a lower or nil rate, and the buyer deducts at that rate.
- 1
Fix the deal terms
Have the agreement to sell, price, buyer details and expected registration date ready, since the application is made for a specific transaction.
- 2
Compute the gain
We work out the cost, transfer expenses, holding period and any exemption you will claim, and the tax on that figure.
- 3
File Form 128 on TRACES
The application goes in under your PAN with the computation, purchase deed, sale agreement and recent ITRs.
- 4
Respond to queries
The officer may ask for proof of cost or exemption plans. We answer these online.
- 5
Share the certificate
The buyer enters the certificate number while depositing TDS, so only the certified amount is withheld.
What must the buyer do when buying from an NRI?
The buyer deducts tax before paying, deposits it within the due time and reports it. From 1 October 2026, a resident individual or HUF buyer no longer needs a TAN and can report through Form 141 Schedule E using their own PAN.
- Individual or HUF buyer, from 1 October 2026: file Form 141 Schedule E on the e-filing portal with each seller's PAN and share. Where some sellers are resident and some are NRIs, Schedule B covers the resident share and Schedule E the NRI share.
- Company, firm or other buyer, or a deduction before 1 October 2026: obtain a TAN and file the quarterly non-resident TDS return (Form 144 under the new rules, earlier Form 27Q).
- Payment timing: tax deducted is due within 30 days from the end of the month of deduction.
- Remittance forms: if sale money is sent abroad, Form 145 (earlier 15CA) and, where required, a CA certificate in Form 146 (earlier 15CB).
Sources: Form 141 FAQs and the Schedule E user manual on the e-filing portal, checked November 2026.
How can an NRI move the sale money abroad?
Sale proceeds normally land in the NRI's NRO account. RBI rules allow an NRI or PIO to remit up to USD 1 million per financial year from NRO balances and asset sale proceeds, with a chartered accountant's certificate and an undertaking, once the tax is settled.
| Property bought | What can be repatriated |
|---|---|
| While resident, or from rupee funds | Within the USD 1 million per year limit, no lock-in |
| With foreign exchange through banking channels | Up to the foreign exchange paid, for not more than two residential properties; balance via NRO under USD 1 million |
| Inherited | Within the USD 1 million per year limit, with proof of inheritance |
| Above USD 1 million in a year | Needs prior RBI permission |
Source: RBI master circular on remittance facilities for non-residents. These circulars may be superseded by RBI's current Master Direction; your bank applies the version in force.
What documents does an NRI seller need?
Keep identity, ownership, cost and bank documents together before you sign the agreement. Most of the delay in NRI sales comes from missing cost proof or an inactive NRO account.
| Document | Used for |
|---|---|
| PAN, passport and visa or OCI card | Identity, non-resident status, avoiding the no-PAN rate |
| Purchase or allotment deed and payment proof | Cost, holding period, foreign exchange paid |
| Agreement to sell with the buyer | Form 128 application |
| Tax residency certificate and foreign tax ID | Treaty claims and Form 141 details |
| Power of attorney, if a relative in Delhi signs | Registration while you are abroad |
| NRO and NRE account details | Receiving and remitting the money |
| Previous Indian ITRs | Supporting the certificate application |
After the sale: ITR filing and refund
The TDS is only a prepayment. The NRI must still report the sale in an Indian ITR for that year, usually ITR-2, claim the TDS credit shown in Form 26AS, and get back any excess as a refund.
For a sale in FY 2025-26, the return is filed under the 1961 Act; the belated deadline is 31 December 2026. Missing it leaves only the updated return route, which cannot be used to claim a refund. Our NRI tax filing page covers residential status and the full return, and the Form 15CA and 15CB guide explains the remittance certificates in detail.
How CA in Delhi handles NRI property sales
NRI sellers often have a parent or sibling looking after a flat in Punjabi Bagh, Model Town or Rohini. We work by email, WhatsApp and video call, and family members can bring papers to Best Sky Tower, Netaji Subhash Place.
Scope usually covers the gain computation, the Form 128 application, a note for the buyer on how to deduct and deposit, the ITR for the year and the remittance paperwork. Greenwolf Advisors, listed in our directory of chartered accountant firms in Delhi, works on cross-border structuring across India, the UAE, the UK and the GCC. Form 146 certificates must be signed by a practising chartered accountant, so we pass that part to a partner CA, and you get one fixed quote for the whole job before work starts. Prefer to visit? Our CA near me page has directions.
Frequently asked questions
Is TDS on sale of property by NRI deducted on the full sale price?
The law taxes the gain, but many buyers deduct on the whole price because they cannot confirm your cost. To make sure TDS is only on the actual tax, apply for a lower deduction certificate in Form 128 before registration and give it to the buyer.
Does a buyer need a TAN to buy property from an NRI?
From 1 October 2026, a resident individual or HUF buyer does not, and can report the deduction in Form 141 Schedule E using their PAN. Companies, firms and other buyers still need a TAN and file a TDS return. Deductions made before 1 October 2026 followed the TAN route.
Is the ₹50 lakh limit applicable when the seller is an NRI?
No. The ₹50 lakh limit belongs to the resident-seller rule. When any seller is non-resident, the buyer must deduct on that seller's share whatever the price.
How long does a lower deduction certificate take?
Timing depends on the Assessing Officer and how complete the application is, so apply as soon as the agreement to sell is signed. We prepare the computation and documents in advance to avoid back-and-forth queries.
Can an NRI claim section 54 or 54EC exemption?
Yes. The exemptions for buying a residential house in India or investing in 54EC bonds within six months are available to NRIs on long-term gains. The indexation option for property bought before 23 July 2024 is the benefit NRIs do not get.
What if the NRI seller has no PAN?
The buyer must deduct at a higher rate under section 397(2) unless the seller gives a foreign address, tax residency certificate and foreign tax identification number. Getting a PAN before the sale is far cheaper.
How can an NRI get back excess TDS?
File the Indian ITR for the year of sale, report the gain and claim the TDS credit. If the final tax is lower, the department refunds the difference to a validated Indian bank account. Track it on the portal, and see our page on an income tax refund not received if it stalls.
Is Form 15CA and 15CB needed to send the money abroad?
From 1 April 2026 these are Form 145 and Form 146. The remitter files Form 145, and where the payment is taxable and above ₹5 lakh, a chartered accountant's certificate in Form 146 is usually needed. Your bank will ask for the acknowledgement.
Does the Income-tax Act 2025 change NRI property TDS?
The obligation is the same but the references changed from 1 April 2026: section 195 became section 393(2), Form 13 became Form 128, Form 27Q became Form 144 and 15CA/15CB became 145/146. The no-TAN option for individual buyers started on 1 October 2026.