NRI Selling Property in India: TDS, Lower Deduction Certificate and Repatriation Steps

An NRI selling property in India faces a materially different TDS regime than a resident seller, and the mismatch between the two is where most delays and disputes originate - usually because the buyer defaults to the resident-seller TDS rate out of habit.

1. TDS Applies on Sale Value, Not Just Gains - and at a Higher Rate

Under Section 195, the buyer must deduct TDS on the full sale consideration (not just the capital gains component), at rates that are substantially higher than the 1% TDS applicable to resident sellers under Section 194-IA. The applicable rate depends on whether the gain is long-term or short-term, plus applicable surcharge and cess - and the buyer bears personal liability for under-deduction, which is exactly why buyers tend to over-deduct defensively unless the seller intervenes.

2. The Lower/Nil Deduction Certificate Is the Single Most Valuable Step

An NRI seller can apply to the jurisdictional Assessing Officer (via Form 13) for a certificate authorising TDS deduction at a lower rate - reflecting actual capital gains rather than the full sale value. This application takes time to process and must be filed well before the sale closes; NRIs who wait until the sale agreement is signed routinely end up with TDS deducted on the full value and a refund claim that takes a year or more to process instead.

3. Buyer's TAN Obligation Is Separate From the Seller's PAN

Unlike a resident-seller transaction where the buyer simply uses their PAN via Form 26QB, a transaction involving an NRI seller requires the buyer to obtain a TAN and file Form 27Q - a step many first-time buyers of NRI-owned property are unaware of until the transaction stalls at the registration stage.

4. Capital Gains Computation and DTAA Relief

Indexation benefit (where applicable to the asset and holding period) and DTAA relief under the seller's country of residence can both reduce the effective tax outflow, but both need to be built into the lower-deduction-certificate application - not claimed only at return-filing stage, by which point the higher TDS has already been deducted and locked into a refund cycle.

5. Repatriating Sale Proceeds Abroad

Repatriation of up to USD 1 million per financial year from an NRO account (which is where sale proceeds are typically credited) is permitted under FEMA, subject to Form 15CA/15CB certification confirming taxes have been paid or provided for. Missing or incorrect 15CB certification is a common last-mile hold-up after the sale itself has closed cleanly.

Practical Takeaway

The financial difference between an NRI seller who applies for a lower deduction certificate ahead of the sale and one who does not is often the difference between receiving net proceeds immediately and waiting over a year for a refund. This is a pre-sale planning step, not a post-sale filing exercise.

The author is a Partner at Agrawal Khandelwal & Associates LLP, Chartered Accountants in Nashik and Sillod, Maharashtra, advising NRIs on property sale taxation, TDS and repatriation.