TDS on NRI property sales: a practical reference

1. Start with the correct withholding framework

For payments or credits on or after 1 April 2026, withholding is governed by the Income-tax Act, 2025. For a non-resident seller, the buyer’s obligation falls within section 393 and the related compliance/reporting framework in section 397. This is different from the simplified resident-seller property process. Read the current section 397 text.

The buyer should obtain transaction-specific CA advice before any payment, credit, or registration. The amount withheld is not automatically the seller’s final tax liability: final liability depends on the seller’s facts, available exemptions, treaty position where relevant, and the applicable rate/certificate.

2. The 1 October 2026 TAN change is narrow

The Finance Act, 2026 creates a TAN exception for a resident individual or HUF deducting tax on consideration for transfer of immovable property from a non-resident. It does not create a blanket exemption for every purchaser. A company, LLP, partnership, or another buyer outside the statutory wording should not assume the exception applies.

For payment or credit before 1 October 2026, plan for the current TAN-based process. From 1 October, have the buyer’s CA confirm the active portal process, relevant form, and eligibility before payment. The legal rule and portal workflow should be checked together.

3. A lower-deduction certificate can reduce excess cash blockage

A seller may apply electronically for a lower- or nil-deduction certificate under section 395(1) through Form 128 (earlier Form 13). The form asks for the seller’s PAN, payer details, estimated income/tax computation, and supporting tax information. If a certificate is issued, the buyer should apply only the rate and conditions actually stated in it. Read the official Form 128 guidance.

Begin the CA review well before the intended registration date. A signed agreement and buyer details are often important practical inputs for a property-specific application, but the documents, processing period, and certificate outcome depend on the case and should not be promised in advance.

4. Buyer-side reporting matters after deduction

The current quarterly TDS statement for non-salary payments to non-residents is Form 144. The seller should ensure that the buyer’s compliance professional confirms the applicable deposit, statement, and certificate steps for the transaction. The seller should retain the relevant tax evidence for their Indian return and any later bank/remittance request.

Do not use the resident-seller property form simply because a property is being sold. The buyer’s taxpayer status, the seller’s residential status, the payment/credit date, and the statutory exception all matter.

5. Capital-gains tax and TDS are not the same calculation

The holding period, acquisition history, transfer expenses, eligible exemptions, surcharge, cess, other income, and any lower-deduction certificate can all affect the final position. The post-2024 long-term-gains framework is relevant, but no general website calculator should be treated as a binding tax computation or an instruction to the buyer on the exact amount to deduct.

Use the planning tool to organise basic sale and acquisition numbers, then have a CA calculate the formal return and withholding position before the parties fix payment mechanics.

As a high-value illustration, a ₹20 crore sale with a ₹10 crore documented acquisition cost begins with a ₹10 crore pre-expense difference. The two calculators use the same rules to compare tax on gain with the section 195 no-certificate withholding estimate. A Lower Deduction Certificate may reduce cash withheld, but the buyer must follow the rate and terms actually issued and both parties should obtain CA confirmation before payment.

6. Repatriation requires a separate bank process

Sale completion and overseas remittance are separate steps. NRO balances may be repatriated within the RBI’s applicable facility, including the familiar USD 1 million per financial-year framework, subject to the RBI conditions and the authorised dealer bank’s document review. The exact remittance route, tax evidence, forms, and timing must be confirmed with the bank and CA handling the case. Read the RBI’s NRI remittance direction.

7. A practical order of work

Official references

• Income-tax Department — section 397 (compliance and reporting)
• Income-tax Department — Form 128 (earlier Form 13)
• Income-tax Department — tax payments FAQ
• RBI — remittance facilities for non-resident Indians

Selling South Delhi property from abroad?

Grey Beard can coordinate the transaction sequence with the parties and their professionals. Tax filings, certificate applications, legal instruments, and bank remittance compliance should be completed by the qualified professional responsible for them.