NRI Property Sale TDS
Selling Indian property as an NRI? See what the buyer must withhold before you sign
Reviewed by the PaisaTools Editorial Team · Last reviewed September 2026
How to use: Enter the sale price, what you originally paid, how long you held it and whether you have a Form 128 certificate — the TDS the buyer must withhold appears instantly.
Example₹1.2 crore sale, held 5 years, no certificate → ~₹17.9 lakh withheld vs ~₹8.6 lakh on the gain alone
How long did you own it?
Do you have a Lower Deduction Certificate (Form 128)?
TDS the buyer must withhold now
₹14,30,000
Long-term · effective rate 14.3% · on the full sale price, not your gain
On full sale value
₹14.3L
On your gain only (with Form 128)
₹5.2L
A Lower Deduction Certificate would free up about ₹9.1L of blocked cash — that's your own money, not extra tax.
• Held over 24 months, so this is a long-term capital gain: TDS is 12.5% plus surcharge and 4% cess under Section 393(2).
• Without a Lower Deduction Certificate, the buyer must deduct TDS on the ENTIRE sale price, not just your gain — that's the big blocked amount below.
• A Form 128 certificate would cut the withholding by about 9 lakh here — that money isn't extra tax, it's your own cash locked up until you claim a refund.
Before the sale
- • Apply for the Lower/Nil Deduction Certificate (Form 128, under Section 395) with the Income-tax Department BEFORE you sign the sale deed — once TDS is deducted on the full value, you can only recover the excess by filing a return and waiting for a refund.
- • This is Section 393(2), not the 1% resident-seller rate in Section 393 (the old Section 195 and Section 194-IA respectively). Buyers who wrongly deduct 1% from an NRI become liable for the shortfall — make sure the buyer has a TAN and files Form 27Q.
- • Repatriating the proceeds needs Forms 15CA and 15CB and is capped at USD 1 million per financial year from an NRO account.
- • You can still reduce the actual tax on the gain by reinvesting under Section 54 (another house) or 54EC (specified bonds within 6 months) — the TDS is separate from your final liability.
- • Surcharge and the exact gain depend on your total India income and any indexation history. Treat this as an estimate and confirm the figure with a chartered accountant before the transaction.
Runs in your browser — nothing is uploaded. An educational estimate of Section 393(2) TDS, not tax advice: confirm the exact figure with a chartered accountant before your transaction.
Most people selling a home expect the buyer to deduct 1% TDS. For an NRI seller that number is wrong, and the gap is enormous. A resident sale carries just 1% of the price. An NRI sale is Section 393(2) (the old Section 195): long-term gains attract 12.5% plus surcharge and 4% cess — up to roughly 14.95% — and short-term is taxed at slab rates.
The part that catches sellers off guard is the base the TDS is charged on. Unless you first obtain a Lower/Nil Deduction Certificate (Form 128), the buyer must deduct TDS on the entire sale value, not on your gain. On a ₹1 crore property with a ₹20 lakh gain, that can mean about ₹15 lakh withheld — most of it your own capital, locked up until you claim it back in a return.
This tool shows both numbers side by side — what the buyer withholds by default, and what it would be on your gain alone with a certificate — so you can see exactly what applying for Form 128 before the sale is worth.
Based on Section 393(2) of the Income-tax Act 2025 — which replaced Section 195 of the 1961 Act for TDS from 1 April 2026 — and the capital-gains regime for FY 2026-27 (re-verified September 2026): long-term capital gains on property held over 24 months are taxed at 12.5% (post-Budget-2024, without indexation) plus surcharge and 4% health & education cess; short-term gains are taxed at slab rates. Surcharge on the tax is 10% above ₹50 lakh and 15% above ₹1 crore, capped at 15% for capital gains. TDS defaults to the full sale consideration unless a Lower/Nil Deduction Certificate (Form 128 under Section 395, which replaced Form 13 under Section 197) is obtained, and buyers deposit it via a TAN and Form 27Q. Repatriation from an NRO account uses Forms 15CA/15CB and is capped at USD 1 million per financial year. This is an educational estimate, not tax advice — the exact figure depends on indexation history, your total India income and any Section 54/54EC reinvestment, so confirm with a chartered accountant before the transaction.
- The rate depends on the holding period; surcharge and cess apply on top.
- A Form 128 lower/nil-deduction certificate (the old Form 13) changes the amount.
- Is TDS on an NRI property sale really 1%?
- No — that's the trap. The 1% TDS for resident sellers (Section 393, the old Section 194-IA) doesn't apply to an NRI sale. That falls under Section 393(2), the old Section 195: long-term gains are taxed at 12.5% plus surcharge and cess (around 14.95% at the top), and short-term at slab rates (up to about 31%). A buyer who deducts only 1% from an NRI becomes personally liable for the shortfall.
- Is the TDS on my profit or the full sale price?
- By default, on the full sale price. This is what shocks sellers: on a ₹1 crore flat, roughly ₹15 lakh can be withheld even if your actual gain is far smaller. To have TDS charged on the gain alone, you must obtain a Lower/Nil Deduction Certificate (Form 128) from the Income-tax Department before the sale.
- What is a Lower Deduction Certificate and when should I apply?
- Form 128 (which replaced Form 13 from 1 April 2026) is an application to the Assessing Officer for TDS to be deducted on your real capital gain instead of the entire sale value. Apply well before you sign the sale deed — once TDS is deducted on the full value, the only way to recover the excess is to file a return and wait months for a refund.
- How is long-term vs short-term decided for property?
- Property held for more than 24 months is long-term (12.5% TDS plus surcharge and cess). Held for 24 months or less, it's short-term and taxed at your slab rate, so the buyer typically withholds at the highest slab.
- Can I reduce the actual tax, not just the TDS?
- Yes. TDS is only withholding — your final liability is settled when you file. You can reduce the tax on a long-term gain by reinvesting in another house (Section 54) or in specified bonds within six months (Section 54EC). Any excess TDS is refunded after you file your return.