Selling Property in India as an NRI? Here's How to Avoid Locked-Up TDS
NRIs face TDS as high as 20%+ on property sales — often far more than the actual tax due. A lower-deduction certificate fixes that.
CA Fatima Sheikh
Manager — International Tax & NRI · · 3 min read
When an NRI sells property in India, the buyer must deduct TDS not on the profit, but on the entire sale value — at rates that can exceed 20% plus surcharge and cess. For most sellers, that's dramatically more than the tax actually owed.
Why the default TDS is so painful
The tax you actually owe is on your capital gain, which after indexation is usually a fraction of the sale price. But the default TDS ignores this, locking up a large sum you can only recover by filing a return and waiting for a refund — often a year later.
The fix: Form 13 / Section 197
You can apply to the Income Tax Department for a lower- or nil-deduction certificate under Section 197. This tells the buyer to deduct TDS only on your actual expected gain, not the full sale value.
- Compute the real capital gain with indexation
- Apply for the certificate before the sale closes
- Give the certificate to the buyer for correct deduction
- File your ITR to claim any small balance refund
The difference is cash flow: with the certificate, you keep your money now instead of lending it to the government for a year.
The key is timing — the application must be made before the transaction. We routinely secure these certificates for NRI clients selling Indian property from abroad.
