TDS on sale of property by an NRI: calculator for 2026-27

How much TDS does a buyer deduct when buying from an NRI?

For a long-term sale (held more than 24 months) the TDS rate is 12.5%, plus surcharge and 4% health and education cess. Surcharge depends on the amount: 10% above ₹50 lakh and 15% above ₹1 crore, and it is capped at 15% for long-term gains. That makes the effective rate about 13% up to ₹50 lakh, 14.3% from ₹50 lakh to ₹1 crore and 14.95% above ₹1 crore.

For a short-term sale (24 months or less) the buyer usually deducts at 30% plus surcharge and cess, because the buyer can’t know the seller’s slab.

Worked example: an NRI sells land for ₹1 crore with no certificate. TDS = 12.5% × ₹1,00,00,000 = ₹12,50,000, plus 10% surcharge (₹1,25,000) and 4% cess (₹55,000) = ₹14,30,000.

Is TDS on the full sale price or only on the capital gain?

The law taxes only the gain, but a buyer can’t verify the seller’s cost, so in practice buyers deduct on the full sale price unless the seller produces a lower or nil TDS certificate from the tax department.

Using the same ₹1 crore sale, suppose the seller’s cost was ₹40 lakh, so the gain is ₹60 lakh. The seller’s actual tax is 12.5% × ₹60 lakh = ₹7,50,000, plus 10% surcharge and 4% cess = ₹8,58,000. TDS on the full price was ₹14,30,000, so about ₹5,72,000 is over-deducted and can only come back as a refund after filing an Indian tax return.

What is a lower TDS certificate for NRIs, and how do you get one?

It is a certificate from the Assessing Officer telling the buyer to deduct at a lower rate or on a lower amount, based on the seller’s real gain. Under the old Act this was section 197 with Form 13. Since 1 April 2026 it is section 395 of the Income-tax Act, 2025, and the application is Form No. 128, filed online.

Apply as soon as a buyer and price are agreed, with the sale agreement, the purchase or inheritance papers, a valuation (for inherited property bought before 2001) and details of any planned reinvestment. Processing takes time, so build it into the sale timeline — the buyer can only use a certificate that exists on the payment date.

What changed under the Income-tax Act, 2025?

The new Act took effect on 1 April 2026. Section 195 of the old Act is now section 393(2), the quarterly non-resident TDS return Form 27Q is now Form 144, and Forms 15CA and 15CB for sending money abroad are now Forms 145 and 146. The rates themselves did not change.

From 1 October 2026, a resident individual or HUF buying from a non-resident can deposit this TDS using their PAN through Form 141, instead of first getting a TAN — a change announced in Budget 2026. The buyer should still give the seller the TDS certificate afterwards. These figures were last checked on 24 Sept 2026 — confirm the current process and rates with a chartered accountant before the sale.

How does the NRI seller get excess TDS back?

By filing an Indian income tax return for the tax year of the sale, showing the real gain and claiming the TDS as a credit. The difference is refunded, usually to an Indian bank account, often an NRO account.

Make sure the buyer quotes the seller’s correct PAN and files the TDS on time, because a refund is only possible for TDS that shows up against the seller’s PAN.