What is Lower TDS certificate?

When an NRI sells property in India, the buyer must deduct tax at source under section 393(2) of the Income-tax Act, 2025 (section 195 of the 1961 Act). Because a buyer can’t verify the seller’s original cost, they usually deduct on the whole sale price — which can be far more than the tax actually due.

The seller can apply online for a certificate under section 395 of the Income-tax Act, 2025 (section 197 of the 1961 Act) using Form No. 128, which replaced Form 13 from 1 April 2026. The Assessing Officer reviews the expected gain and issues a certificate telling the buyer to deduct at a lower rate or on a lower amount — or nil where no tax is due.

The certificate is specific to the buyer and the transaction, and it takes time to process, so apply well before the sale date. Without it, the seller has to claim the excess back as a refund by filing an Indian tax return.

Why it matters if you live abroad

On an inherited plot with a large cost base, a lower TDS certificate can stop lakhs of rupees being locked up until a refund comes through — plan it with a CA before signing.