Clarification on Nature of Payment Code for NRI Property Sale in Form 27Q (AY 2026-27)

• No Certificate Case: If no Section 197 certificate exists, do not select codes referencing Section 197.

• Selection: Choose the code for "Any other payment to non-resident... as long-term capital gains".

• TDS Liability: Remember that without the certificate, the law requires you to deduct TDS on the entire sale consideration (or the capital gains, depending on specific compliance) at the applicable rate.

Thank you for your response, Sir.

In my case, TDS has been deducted on the entire sale consideration at 12.5%, as no certificate under Section 197 was obtained.

However, while filing Form 27Q, I am unable to find any Nature of Payment option such as "Any other payment to non-resident – Long-Term Capital Gains."

The utility only provides the following LTCG options:

• LTCG u/s 197(1) [112]
• LTCG u/s 197(4) [112(1)(c)(iii)]
• LTCG u/s 198 [112A]
• LTCG u/s 214 Sl. No. 1 (115E)
• LTCG u/s 214 Sl. No. 2 (115E)

Could you please clarify which Nature of Payment code should be selected in this situation for the purchase of immovable property from an NRI where TDS has been deducted on the entire sale consideration at 12.5% and no Section 197 certificate exists?

From the options you have listed, LTCG u/s 197(1) [112] is the most appropriate code for a land sale by an NRI where no Section 197 certificate was obtained.

Here is the logic:

Section 197 of the new Income Tax Act 2025 corresponds to old Section 112, which covers long-term capital gains tax on assets other than equity shares and equity mutual funds. Immovable property (land) falls under this category. The LTCG rate of 12.5% you applied aligns with the Section 197(1)/112 rate under the current Act.

Section 198 [112A] is for listed equity shares and equity-oriented mutual fund units only ,  not property. Do not use this.

Section 214 (115E) codes are specifically for NRI income from foreign exchange assets such as certain bonds and shares acquired in foreign currency. Residential land does not qualify as a "foreign exchange asset" under this provision.

The absence of a Section 197 lower-deduction certificate does not change the nature-of-payment code ,  it only means you apply the full statutory rate (which you did at 12.5%). LTCG u/s 197(1) [112] without a certificate is the standard path for property transactions.

This [NRI capital gains tax and TDS guide](https://taxgarden.in/blog/nri-capital-gains-tax-property-shares-tds-itr-india-guide) has a section on Form 27Q/144 filing for property sales that may help with the remaining fields.

Thank you for the clarification, Sir.

My only doubt is that the option specifically reads "LTCG u/s 197(1) [112]". Since Section 197(1) generally relates to a lower/nil deduction certificate, and no such certificate was obtained in my case, would it still be correct to select this code? Is the reference to Section 197(1) merely a Nature of Payment code in the TDS utility and not indicative of the existence of a Section 197 certificate?