Quick answer
How much TDS is deducted when an NRI sells property in India?
Without a certificate, buyers often deduct TDS on the full sale price, roughly 13% to 15% for property held over two years. A lower TDS certificate, applied for before the sale, limits TDS to the tax on your actual gain.
The problem with NRI property sales
When a resident sells property, the buyer deducts just 1% TDS. When an NRI sells, the buyer must deduct TDS on the capital gain at full rates. In practice, without a certificate, most buyers deduct on the whole sale price to stay safe.
For a property held over two years, that is roughly 13% to 15% of the full price, depending on the amount. For a shorter holding it is far higher. That money stays with the government until you file your return and the refund is processed.
The fix: a lower TDS certificate
You can apply to the Income Tax Department for a certificate that tells the buyer to deduct TDS only on your actual tax, worked out from your real gain. Your gain is the sale price minus the cost of buying the property, the cost of improvements, and any exemption you plan to claim.
Apply before the sale. The certificate usually takes a few weeks to come through, so start as soon as you have a buyer and an agreed price.
What we do, step by step
- Work out your capital gain from the purchase deed, improvement costs and sale price. For inherited property, we use the previous owner's cost and holding period.
- Plan exemptions: reinvesting the gain in another house in India, or in specified bonds within 6 months, can reduce or remove the tax.
- Apply for the lower TDS certificate and follow up until it is issued.
- Help your buyer: a buyer from an NRI needs a TAN and must file a TDS return. We can do this for them, which makes the sale smoother.
- File your Indian ITR after the sale and claim a refund of any excess TDS.
- Repatriation: prepare the certificates your bank needs to send the money abroad from your NRO account, with our associate Chartered Accountant. NRIs can generally send up to USD 1 million a financial year from NRO balances, after tax.
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Common questions
Does the 1% TDS rule apply when an NRI sells?
No. The 1% rule is for resident sellers. For NRI sellers, TDS is on the capital gain at full rates, which is why a lower TDS certificate matters. Our article on TDS when buying property explains the resident rule.
When should I apply for the lower TDS certificate?
As soon as you have a buyer and an agreed price, and before the sale deed is registered.
Can I sell property through a Power of Attorney?
Yes. Many NRIs sell through a registered Power of Attorney given to a family member in India. The tax steps stay the same.
I inherited the property. How is the gain worked out?
The cost and holding period of the person you inherited from are used. This usually makes the gain long term, which is taxed at a lower rate.
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