If you are an NRI selling immovable property, it’s crucial to understand how much tax is withheld at source (TDS) by the buyer under Income Tax Act, 1961 (particularly under Section 195) and the recent rule changes. Here is how much TDS on sale of property for NRI;
When a non-resident (including an NRI) sells property in India, the buyer is required to deduct tax before making payment. This deduction applies on the entire sale consideration unless a lower-deduction certificate is obtained.
For properties held more than 2 years, the gains are treated as long-term. Effective from 23 July 2024, the base TDS rate for such a transfer by an NRI is 12.5% of sale value (or capital gain) + surcharge + health & education cess. Example: With surcharge & cess, effective rate often comes to 13-15% of sale value.
If the property is sold within 2 years of acquisition, it is treated as short-term gain. The tax is at the NRI’s applicable slab rate (up to 30%) + surcharge + cess, and the buyer must deduct TDS accordingly (often treated as 30% +).
The buyer holds responsibility for deduction and deposit of TDS using appropriate forms (e.g., Form 27Q).
If you expect your ultimate tax liability to be lower, you (seller) can apply for a lower or nil-deduction certificate under Section 197; once granted, the buyer can deduct at that lower rate. Failing to comply may result in the buyer being liable for interest and penalty; the seller may find it difficult to repatriate sale proceeds.
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How Much TDS on Sale of Property for NRI?
pragati
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2025-11-26T07:56:16+00:00 2025-11-26T07:56:18+00:00Comment
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