When NRIs sell property in India, the buyer is required to deduct TDS under Section 195. It is 30% for properties held under 2 years (short-term capital gains) and 20% for properties held longer (long-term capital gains), plus applicable surcharge and cess. However, this deduction is often on the gross sale value. So, how to avoid TDS on sale of property by NRI? I have shared a few tips below.
How to Avoid TDS on Sale of Property Done by NRI?
To avoid this, you may apply for a Lower or Nil TDS Certificate under Section 197 by submitting Form 13 to the Assessing Officer (AO) before the sale.
The AO evaluates your actual tax liability, which may account for indexation, deductions, and exemptions.
It issues a certificate specifying the lower TDS rate.
Once obtained, the buyer deducts TDS at this reduced rate during payment.
The Form 13 application is filed online via the TRACES portal, and the only verified method of authentication is a Digital Signature Certificate (DSC).
Processing typically takes 3 to 6 weeks, although in some cases the AO disposes of it within 30 days of receipt.
Once approved, the certificate remains valid for the specified financial year and can even be issued at a fractional rate. I hope you found this information useful.
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Non-Resident Indians (NRIs) selling property in India face mandatory TDS deduction under Section 195 of the Income Tax Act. But do you know how to avoid TDS on sale of property by NRI? You must submit an application in Form 13 to the income tax department to receive a certificate for Nil/Limited Deduction of TDS to reduce TDS on a property transaction by an NRI.
Tips to Reduce TDS for Property Sale by NRI
Some legal options exist to minimize or avoid NRI tax deduction:
Approach the Income Tax Department by submitting Form 13 with proof of expected capital gains tax liability. If approved, the buyer deducts TDS at a reduced rate (or zero) instead of the flat 20%.
Reinvest Sale Proceeds Under Section 54/54F:
Section 54: Exempts capital gains if reinvested in residential property (purchase within 2 years/sale within 3 years).
Section 54F: Applies to the sale of non-residential property if the proceeds buy a residential property.
If excess TDS is deducted, file ITR and Form 26AS to claim a refund after the financial year ends. I hope you found this helpful.
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How to Avoid TDS on Sale of Property by NRI?
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2025-05-30T06:59:58+00:00 2025-05-30T07:00:00+00:00Comment
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