Question 1

What is a Lower TDS Certificate for NRI property sale?

Accepted Answer

When a Non-Resident Indian (NRI) sells property in India, the buyer must deduct Tax Deducted at Source (TDS) on the payment made to the non-resident seller. Under the Income-tax Act, 2025, this requirement arises under Section 393, which governs tax deduction on payments made to non-residents. This provision corresponds to Section 195 of the Income-tax Act, 1961. In NRI property transactions, TDS is deducted on the entire sale consideration and not only on the capital gain, which can result in excess tax deduction compared to the actual tax liability. To avoid this situation, the NRI seller can apply for a Lower or Nil TDS Certificate. Under the Income-tax Act, 2025, the application is made using Form 128 under Section 395(1) (earlier Form 13 under Section 197 of the Income-tax Act, 1961). If the Assessing Officer is satisfied that the estimated tax liability is lower, a certificate is issued authorising the buyer to deduct TDS at the reduced rate specified in the certificate.

Question 2

How long does it take to obtain a Lower TDS Certificate?

Accepted Answer

The process generally takes around 35 to 40 working days from the date the application is submitted, subject to review by the Assessing Officer. The timeline may vary depending on: completeness of the documents submitted complexity of the capital gains computation additional queries raised by the Assessing Officer NRIs are therefore advised to apply well in advance of the expected property transaction date.

Question 3

What is the TDS rate on sale of property by an NRI?

Accepted Answer

When an NRI sells property in India, the buyer must deduct TDS under Section 393 of the Income-tax Act, 2025 (earlier Section 195). The applicable rate depends on the holding period of the property. Holding Period Gain Type Base Tax Rate More than 24 months Long-Term Capital Gain (LTCG) 12.5% 24 months or less Short-Term Capital Gain (STCG) As per applicable income-tax slab rates (up to 30%) In addition to the base tax rate, surcharge and 4% health and education cess may also apply. Surcharge on Long-Term Capital Gains for property sale Long-term capital gains on property are subject to surcharge depending on the taxpayer's total income. Total Income Surcharge Rate Effective Rate (including 4% cess) Up to &#8377;50 lakh Nil 13.00% &#8377;50 lakh - &#8377;1 crore 10% 14.30% Above &#8377;1 crore 15% (maximum cap) 14.95% Surcharge on Short-Term Capital Gains Where the property is held for 24 months or less, the gains are taxed at applicable slab rates. Surcharge may apply depending on the total income. Total Income Surcharge Rate Up to &#8377;50 lakh Nil &#8377;50 lakh - &#8377;1 crore 10% &#8377;1 crore - &#8377;2 crore 15% &#8377;2 crore - &#8377;5 crore 25% Above &#8377;5 crore 37% (old regime) / 25% (new regime)

Question 4

Why should an NRI apply for a Lower TDS Certificate?

Accepted Answer

TDS for NRI property transactions is deducted on the entire sale consideration, not on the capital gain. For example, if a property is sold for &#8377;1.5 crore, TDS may be deducted on the full amount even if the actual capital gain is significantly lower. This can lead to large excess tax deductions, which the NRI seller can only recover later by filing an income tax return and claiming a refund. By applying for a Lower TDS Certificate using Form 128, the Assessing Officer calculates the estimated capital gain and tax liability and authorises the buyer to deduct TDS at the appropriate reduced rate.

Question 5

Is physical presence in India required to obtain a Lower TDS Certificate?

Accepted Answer

No. Physical presence in India is not required. NRIs can apply for the Lower TDS Certificate online through the TRACES portal or the Income-tax e-Filing portal. A representative in India may also be authorised to handle the application and respond to any queries raised by the Assessing Officer.

Question 6

What happens if the Lower TDS Certificate is not approved?

Accepted Answer

If the Assessing Officer does not approve the application, the buyer must deduct TDS at the standard applicable rate under Section 393. The NRI seller can subsequently claim a refund of the excess tax deducted by filing an income tax return for the relevant tax year.

Question 7

Whose responsibility is it to obtain the Lower TDS Certificate?

Accepted Answer

It is the responsibility of the NRI seller to apply for and obtain the Lower TDS Certificate using Form 128 under Section 395(1). The certificate must be shared with the buyer before the property transaction is completed.

Question 8

Whose responsibility is it to deduct and deposit TDS?

Accepted Answer

The buyer of the property is responsible for: deducting TDS from the sale consideration depositing the tax with the Government obtaining a TAN (Tax Deduction Account Number) filing the quarterly TDS return in Form 144 (earlier Form 27Q) issuing Form 131 (earlier Form 16A) to the NRI seller as the TDS certificate

Apply for NRI Lower TDS certificate on Sale of Property in Pune and Mumbai

How Your Progress Unfolds

Consultation & Planning

Application & Documents

Computation & Portal Filing

Certificate & Completion

Consultation & Planning

Simple and Affordable Pricing

Basic Plan - Single Seller

₹17,500

Premium Plan - Single Seller

₹22,500

Ultra Plan - Single Seller

₹30,000

Why Seek Help from NRI Tax Hub for a Lower Deduction Certificate

Expertise and Efficiency

Financial Optimization

Comprehensive Support and Time-Saving

When to Apply for a Lower Tax Deduction Certificate

Talk to an NRI Tax Consultant

Frequently Asked Questions

Company

Legal

Apply for NRI Lower TDS certificate on Sale of Property in Pune and Mumbai

How Your Progress Unfolds

Consultation & Planning

Application & Documents

Computation & Portal Filing

Certificate & Completion

Consultation & Planning

Simple and Affordable Pricing

Basic Plan - Single Seller

₹17,500

Premium Plan - Single Seller

₹22,500

Ultra Plan - Single Seller

₹30,000

Why Seek Help from NRI Tax Hub for a Lower Deduction Certificate

Expertise and Efficiency

Financial Optimization

Comprehensive Support and Time-Saving

When to Apply for a Lower Tax Deduction Certificate

Talk to an NRI Tax Consultant

Frequently Asked Questions

Related Guides and Articles

Property Sale by NRIs: Capital Gains, TDS, and Repatriation Basics

NRI ITR Filing: Documents You Need to Prepare First

4 Common NRI Tax Filing Errors and How to Avoid Them