TDS u/s 195 on sale of property by NRI

Yes, Section 195 is the correct provision — 194-IA does not apply when the seller is a non-resident. The 14.95% rate = 12.5% (LTCG post 23 July 2024) + 15% surcharge + 4% cess, which fits a sale consideration in the ₹1 cr–₹2 cr band.

However, the bigger issue is that TDS u/s 195 is required only on the income chargeable to tax (i.e., capital gains), not on gross sale consideration. Since the buyer has deducted on the entire sale value, your brother's funds are unnecessarily blocked. The remedy now is to file ITR-2 for AY 2026-27 and claim refund, ideally after computing capital gains with indexation/grandfathering benefit where applicable, and exploring exemption u/s 54 / 54EC / 54F.

Going forward (for any NRI client/relative), always apply for a Lower Deduction Certificate u/s 197 in Form 13 before execution of sale deed — this is the only clean way to avoid the refund-blockage cycle.

Also confirm the buyer has a TAN, has filed Form 27Q, and issued Form 16A — these are mandatory under 195 (Form 26QB does not apply here).

Thanks. The buyer did have TAN and filed 27Q. But Form 16A not provided. However, the transaction appears as normal transaction (not as a property transaction) in 26 AS, TIS and AIS. Should my brother insist form Form 16A?

Yes, Section 195 is correct - 194IA applies only to resident sellers, so NRI property transactions always fall under Section 195. The 14.95% rate (12.5% LTCG plus 15% surcharge plus 4% cess) is appropriate for sale consideration in the Rs 1-2 crore bracket. Key thing to note: TDS under Section 195 should be computed on capital gains, not the full sale consideration, so if the buyer deducted on the gross sale amount your brother can compute actual capital gains in his ITR, apply Section 54 exemption if eligible, and claim the excess as a refund. This [Section 195 guide](https://taxgarden.in/blog/tds-on-non-residents-section-195-393-guide-india-fy-2026-27) covers the buyer Form 27Q obligations and the ITR refund process in detail.

Thanks for the clarification. However, another clarification needed, the sale consideration was above Rs. 2 Cr and it was given to understand that in case of property LTCG, the surcharge is capped at 15%. Is it correct?