Tax · Free tool
NRI Property Sale Tax
Buyer of NRI-owned property must deduct TDS under section 195 — typically on the entire sale value at LTCG rate (12.5% post Budget 2024). NRI seller can apply for a lower deduction certificate to reduce TDS to actual gain only.
LTCG triggers at > 24 months.
How the tax stack works
When a non-resident sells immovable property in India, the buyer is required under Section 195 to deduct TDS at the LTCG / STCG rate on the entire sale consideration (not just the gain), and remit it to the Income Tax Department within 7 days using Form 27Q + a TAN. Post Budget 2024, LTCG on property held > 24 months is taxed at 12.5% without indexation (or 20% with indexation for pre-23 July 2024 acquisitions — the seller can pick the lower). STCG is taxed at slab rates. Surcharge (10–37%) and 4% cess apply on top.
Worked example
NRI sells a Pune flat for ₹1.5 crore, bought in 2010 for ₹40 lakh. Without a lower-deduction certificate, buyer must withhold 12.5% × 1.5 cr = ₹18.75 lakh TDS on the full sale value plus surcharge/cess ≈ ~₹22 lakh. The actual LTCG is only ~₹1.1 crore × 12.5% = ₹13.75 lakh. By applying for a Lower Deduction Certificate (Form 13) from the jurisdictional AO before sale, TDS can be reduced to the actual gain-only tax — saving ₹8–9 lakh upfront in working-capital lockup that would otherwise wait until ITR refund (12–24 months).
When to use this
- Pricing in TDS impact before signing the sale agreement so the buyer doesn't under-withhold
- Deciding whether to apply for a Lower Deduction Certificate — almost always worth it above ₹50L sale value
- Planning Section 54 / 54EC reinvestment in another house or REC / NHAI bonds to defer the LTCG
- Computing the FEMA-compliant amount you can repatriate (USD 1M/yr from NRO account post tax)
See Capital Gains Calculator for the standard property gain math, and NRE vs NRO to route the proceeds correctly.
FAQ
Does the buyer just deduct 1% TDS like for a resident?
No — section 194-IA does NOT apply to NRI sellers. Section 195 applies, with TDS at LTCG / STCG rate on the FULL sale value. The buyer needs a TAN to comply.
How does the lower deduction certificate help?
NRI seller applies under section 197 to the AO. Once issued, TDS is deducted only on the actual capital gain, not the full sale value. Saves significant cashflow.
Can the NRI claim section 54 / 54F?
Yes — same rules as resident. Reinvest gain in another residential property within 2 years (or under-construction within 3 years). Reinvestment must be in India.