Why a lower-deduction certificate matters
TDS on a sale by a non-resident applies to the whole taxable gain, and buyers — who are liable if they get it wrong — often deduct on the full consideration to be safe. On a ₹1 crore sale with a ₹20 lakh gain, the difference between tax on the gain and tax on the whole price is substantial, and without a certificate the seller waits for a refund after filing a return.
A lower or nil deduction certificate, applied for before the sale, tells the buyer exactly how much to deduct. It takes time to obtain, so the application should go in as soon as the sale is agreed.
Computing the gain
- Property held for more than 24 months is long-term; the gain is taxed at 12.5%.
- For land or buildings acquired before 23 July 2024, resident individuals and HUFs can choose 20% with indexation; non-residents can't choose this — their long-term gains on property are taxed at 12.5% without indexation.
- Cost of acquisition, cost of improvement and transfer expenses such as brokerage are deducted.
- Where the stamp duty value exceeds the agreed price by more than 10%, the stamp duty value is taken as the sale consideration.
Documents required
- Purchase deed and sale agreement, with the agreed consideration.
- Evidence of cost of improvement, if any.
- PAN of the seller and buyer.
- Passport and visa details, and travel dates for residential status.
- Details of any reinvestment planned for exemption.
- NRO bank account details for the sale proceeds.
How we handle it
Compute the gain
Cost, holding period and the applicable rate, with exemptions considered.
Apply for a lower-deduction certificate
Form 128 filed with the computation, before the sale.
Guide the buyer
The buyer deducts at the certified rate; from 1 October 2026 a resident individual or HUF buyer can report it through Form 141 without a TAN.
File the return
The gain and TDS reported in the NRI's return, with exemptions claimed.
Repatriate
Proceeds moved abroad from the NRO account with Forms 145 and 146 — see NRO repatriation.
Practical notes from our engagements
- Certificate applied for after the sale. It only helps if the buyer has it before paying. Apply as soon as the price is agreed.
- Buyer deducting at 1%. The 1% rule applies to resident sellers only. A buyer who deducts 1% from an NRI remains liable for the shortfall.
- Proceeds credited to an NRE account. Sale proceeds of property generally go to the NRO account, from which they're repatriated within the limits.
How we handle NRI property sales
We compute the gain, apply for the lower-deduction certificate, guide the buyer on TDS, file the return with exemptions, and handle repatriation — all online.
Related services
Frequently asked questions
How much TDS is deducted when an NRI sells property?
On long-term gains, 12.5% plus surcharge and 4% cess on the taxable gain; short-term gains at slab rates. Without a lower-deduction certificate, buyers often deduct on the full price.
Does the buyer need a TAN?
From 1 October 2026, a resident individual or HUF buyer can deduct and pay using their PAN through Form 141, without a TAN. Companies, firms, LLPs and other buyers still need a TAN and file the regular TDS return.
How do I get a lower TDS certificate?
By applying in Form 128 (earlier Form 13) with a computation of the actual tax liability, before the sale.
Can an NRI claim Section 54 exemption?
Yes. Reinvesting the gain in a residential house in India within the time limits — Section 82 of the 2025 Act, earlier Section 54 — can exempt it, subject to the ₹10 crore cap.
How much can be repatriated?
Up to USD 1 million per financial year from the NRO account, including sale proceeds, with Forms 145 and 146.