---
title: "TDS on Sale of Property by NRI: A Comprehensive Guide 🏡💰"
url: https://cacpa.in/tds-on-property-sale-by-nri-guide/
date: 2025-02-13
modified: 2025-05-29
author: "Author"
---

# TDS on Sale of Property by NRI: A Comprehensive Guide 🏡💰

When a Non-Resident Indian (NRI) decides to sell property in India, it triggers specific tax implications under the Income Tax Act, 1961. One of the key aspects to navigate is **Tax Deducted at Source (TDS)** under **Section 195**. It’s crucial to note that TDS is applicable only on the **capital gain** arising from the sale and **not** on the total sale proceeds. However, the actual calculation of capital gains is determined by the **Income Tax Officer** and not by the buyer or seller.

## Key Points to Remember 🔑

- **Capital Gain Calculation**Only the Income Tax Officer can compute the capital gain. Neither the buyer nor the seller has the authority to do so.

- **TDS Without Certificate**If no certificate for lower TDS is obtained, TDS must be deducted on the **entire sale amount** based on the applicable tax rates (including surcharge and cess).

- **TDS on Every Payment**TDS needs to be deducted on **each installment** made to the NRI seller, regardless of the payment size.

- **Excess TDS Refund**Any excess TDS deducted can be **claimed as a refund** by the NRI when filing their Income Tax Return (ITR).

- **Section 206AA Exemption**This section mandates higher TDS for transactions without PAN. However, it **does not apply** to NRIs as per government notifications.

- **Form 15CA & 15CB**These forms may be required for compliance before remitting payment to the NRI seller.

## TAN Requirement for TDS 📑

- **TAN (Tax Deduction Account Number)** is mandatory for the buyer when deducting TDS.
- In case of **multiple buyers**, each must obtain a separate TAN.
- TDS should be deducted **only after** obtaining the TAN on every payment made to the NRI seller.

## TDS Applicability on Sale of Property by NRI 💸

The buyer is responsible for deducting TDS **before** making any payment to the NRI seller. The TDS rate depends on the type of capital gain:

### 1. Long-Term Capital Gains (LTCG)

- **Applicable When:** Property is held for **more than 2 years.**
- **TDS Rate:** **12.5%** (plus surcharge and cess).
- **Note:** From **FY 2024-25**, NRIs **will not** be eligible for the indexation benefit on the cost of acquisition of capital assets.

### 2. Short-Term Capital Gains (STCG)

- **Applicable When:** Property is held for **2 years or less.**
- **TDS Rate:** Based on the NRI’s **applicable tax slab** rate.

## Buyer’s Responsibilities 📝

The buyer must:

- **Deduct TDS** from the sale price.
- **Deposit TDS** with the government using **Challan ITNS 281.**
- **File Form 27Q** (TDS return) within the due date.
- **Provide Form 16A** (TDS certificate) to the NRI seller as proof of deduction.

## Lower or Nil TDS Certificate 📄

- **Form 13**: NRIs can apply for a **Lower/Nil TDS Certificate** if their tax liability is lower than the standard TDS.
- The **Income Tax Officer** will calculate the capital gain and issue a certificate indicating the amount chargeable to tax.

## Claiming a TDS Refund 🔄

If the NRI seller has paid **excess TDS**, they can **claim a refund** by:

- **Filing an Income Tax Return (ITR-2 or ITR-3)** in India.
- **Declaring the actual capital gain/loss** and availing exemptions under sections like **54 (reinvestment in residential property)** or **54EC (investment in bonds).**
- **Receiving a refund** if TDS deducted exceeds the actual tax liability.

## Key Compliance and Timelines ⏰

- **TDS Deposit Due Date:** **7th** of the following month after deduction.
- **TDS Return (Form 27Q):** **End of each quarter.**
- **TDS Certificate (Form 16A):** Within **15 days** after filing Form 27Q.
- **ITR Filing Due Date for NRIs:** **31st July** (unless extended).

## Conclusion ✅

TDS on the sale of property by NRIs involves **multiple tax regulations** and compliance requirements. Both **buyers and sellers** must be aware of their obligations to avoid penalties and ensure smooth transactions. NRIs should explore exemptions and rebates to **optimize their tax liability** while ensuring accurate documentation and **timely filing of returns.**

 
 **CA Khushi Sharma, Senior Associate at C.P. Agrawal & Associates**

*For Income Tax solutions, call our experts at **+91 93112 21571** today!*