TDS on Property Purchase from NRI
Buying property in India from a Non-Resident Indian (NRI)? Understand the buyer's TDS responsibilities, applicable deduction rates, Form 141 Schedule E, lower TDS certificates and payment procedures under the latest Income-tax Act, 2025 rules.
Important Change from 1 October 2026
An eligible resident individual or HUF buyer purchasing immovable property from a non-resident seller can deduct and report applicable tax using Form 141, Schedule E, without obtaining a TAN solely for this transaction. Other buyer categories may still require TAN-based reporting.
Verify seller's tax residency
Determine applicable TDS
Deduct, deposit and report
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TDS treatment depends on the buyer category, seller's tax-residential status and transaction details.
TDS on Property Purchase from NRI: Complete Overview
Buying property from a Non-Resident Indian (NRI) involves additional tax compliance responsibilities. Unlike an ordinary purchase from a resident seller, the buyer must examine Section 195 (Now Section 393(2)), determine the applicable TDS and complete the prescribed deduction, payment and reporting procedures.
Important Change from 1 October 2026: Form 141 Schedule E
An eligible resident individual or resident HUF buyer purchasing immovable property from a non-resident seller can use Form 141, Schedule E for applicable TDS reporting and payment under Section 393(2), Table Serial No. 17.
For this specified transaction, the buyer is not required to obtain a TAN solely for deducting the relevant TDS. Instead, the prescribed challan-cum-statement can be filed through the buyer's PAN login. Companies, firms and other ineligible buyer categories must continue following the applicable TAN-based process.
For a broader explanation of the updated legal framework, read our guide to Section 393 TDS on sale of property.
What Should a Buyer Know Before Purchasing Property from an NRI?
These six essentials explain how to identify the correct deduction provisions, review seller documents and complete the transaction without overlooking important TDS requirements.
Applicable NRI TDS Rules
Understand when TDS applies to a payment made to a non-resident property seller. The applicable withholding amount depends on the sum chargeable to tax, rates in force, surcharge, cess and any valid certificate or determination.
Property Value & Taxable Gain
Know the difference between the property's sale consideration and the seller's taxable capital gain. A buyer should not automatically treat the resident-property 1% TDS rule as applicable to an NRI seller.
Lower / Nil TDS Certificate
Check whether the seller has obtained a valid lower/nil deduction certificate under Section 197 (Now Section 395(1)). The buyer must verify and follow the certificate's applicable conditions when deducting tax.
Seller Residency & Documents
Verify the seller's residential status under Indian income-tax law. Collect relevant PAN, property ownership, co-owner, sale agreement and tax-deduction documentation before making the payment.
DTAA & Tax Residency
A foreign Tax Residency Certificate or treaty claim does not automatically remove Indian property-sale TDS. Review any treaty benefit separately from the buyer's statutory withholding obligation.
TDS Deposit & Reporting
Identify the correct TDS payment stage, deposit the amount deducted and complete the applicable statement. Eligible buyers use Form 141, Schedule E, while other buyers follow their applicable TAN-based procedure.
Important: Buyer-Side TDS and Seller's Capital Gains Tax Are Different
The buyer is responsible for deducting and depositing applicable TDS when making a chargeable payment to the non-resident seller. The seller's final tax liability is calculated separately using the relevant capital-gains rules, eligible deductions, exemptions and applicable rates. A lower TDS certificate is not the same as a capital-gains tax exemption.
TDS Rates on Property Purchase from NRI vs Resident Seller
The amount of TDS a buyer must deduct depends primarily on the seller's residential status, the nature of the taxable payment and the applicable legal provision. A property purchase from an NRI does not automatically qualify for the 1% TDS rate used for eligible resident-seller transactions.
| Aspect | Resident Seller | NRI / Non-Resident Seller |
|---|---|---|
| Applicable Law | Section 194-IA (Now Section 393(1), Table Sl. No. 3(i)) | Section 195 (Now Section 393(2), Table Sl. No. 17) |
| TDS Rate |
Generally 1%
Applies to eligible property transactions when the statutory conditions are met. |
Applicable Rates in Force
Determined by the nature of the income chargeable to tax, applicable law, surcharge, cess and any valid certificate or determination. |
| Threshold | Generally, the ₹50 lakh threshold conditions apply, considering the sale consideration and stamp duty value. | No equivalent general ₹50 lakh property threshold. The non-resident provision depends on the amount chargeable to tax. |
| Deduction Basis | Generally, 1% of the higher of sale consideration or stamp duty value, subject to the applicable threshold and statutory rules. | The sum chargeable to tax and appropriate withholding treatment must be established. A valid lower deduction certificate or appropriate-sum determination may affect the deduction. |
| TAN Requirement | No TAN for the prescribed property challan-cum-statement procedure. | From 1 October 2026, eligible resident individual/HUF buyers do not need TAN solely for this specified transaction. Other buyer categories may still require TAN. |
| TDS Form | Form 141, Schedule B for qualifying transactions. | Form 141, Schedule E for eligible resident individual/HUF buyers from 1 October 2026. Other buyers use applicable TAN-based statements. |
| Lower TDS Option | The ordinary resident-property TDS provision generally follows its specified statutory rate. | A valid lower/nil deduction certificate under Section 197 (Now Section 395(1)) may be available subject to conditions. |
No General ₹50 Lakh Exemption
When buying from a non-resident seller, the buyer cannot rely on the resident-property ₹50 lakh threshold to avoid TDS. The taxability of the payment still needs to be examined.
Lower TDS May Be Possible
A seller may obtain a valid lower/nil deduction certificate where eligible. The buyer must verify its applicability and follow the authorised deduction terms rather than using an estimated tax amount independently.
Check Seller's Holding Period
Whether the property generates short-term or long-term capital gains can affect the seller's tax calculation. The applicable capital-gains rules also influence the withholding assessment.
How Are Short-Term and Long-Term Property Gains Treated?
Long-term capital gains: For qualifying transfers of immovable property on or after 23 July 2024, a general 12.5% capital-gains tax rate without indexation applies, subject to the law, surcharge, cess and applicable exceptions. This must not be treated as a universal flat TDS rate on the full property value.
Short-term capital gains: Where the seller has held the property for the short-term classification period, taxable gains may be subject to the applicable income-tax rates rather than the long-term capital-gains rate.
For the holding-period rules, calculation method and examples, read our detailed guide on short-term capital gains tax on property.
Important: Do Not Apply a Flat 12.5% TDS Rate Without Reviewing the Transaction
The seller's capital-gains tax rate and the buyer's withholding obligation are related but separate issues. The buyer should establish the correct chargeable amount, applicable rates in force, seller documentation and any valid lower/nil deduction certificate or tax determination before making the relevant payment or credit. Incorrect deduction can create additional tax-compliance obligations for the buyer.
Major 2026 TDS Changes for Buyers Purchasing Property from NRIs
The Income-tax Act, 2025 introduced updated TDS provisions from 1 April 2026. A further procedural change on 1 October 2026 simplified TDS reporting for certain resident individuals and HUFs buying immovable property from non-resident sellers.
New Income-tax Act and TDS Provisions
- New statutory section numbers: For property purchases from resident sellers, Section 194-IA (Now Section 393(1), Table Sl. No. 3(i)) governs qualifying deductions. For chargeable payments to non-resident sellers, Section 195 (Now Section 393(2), Table Sl. No. 17) is relevant.
- Form 141 introduced: The Income-tax Rules, 2026 consolidated the earlier prescribed challan-cum-statement forms for specified transactions into Form 141. Schedule B applies to qualifying purchases of immovable property from resident sellers.
- Different rules for NRI purchases: At the start of April 2026, a resident individual or HUF purchasing property from a non-resident seller generally needed to obtain TAN, deduct applicable TDS and file the prescribed non-resident TDS statement.
Simplified PAN-Based TDS for Eligible NRI Property Buyers
- No TAN for specified buyers: An eligible resident individual or resident HUF purchasing immovable property from a non-resident seller no longer needs to obtain TAN solely for this specified transaction.
- Form 141, Schedule E: Eligible resident individual/HUF buyers can use Schedule E of Form 141 to report and pay applicable TDS under Section 393(2), Table Sl. No. 17, through their PAN-based e-Filing login.
- Other buyers are not automatically exempt from TAN: Companies, firms, non-resident purchasers and other buyer categories outside Schedule E eligibility must follow the applicable TAN-based deduction and reporting rules.
- Lower / nil TDS certificates: Section 197 (Now Section 395(1)) allows an eligible seller to seek a certificate for lower or nil deduction. Form 13 (Now Form 128) is the prescribed application form under the Income-tax Rules, 2026.
Which Buyers Can Use Form 141, Schedule E?
The October 2026 change depends on the buyer's residential status and taxpayer category.
Resident Individual / Resident HUF
Where a resident individual or resident HUF purchases immovable property from a non-resident seller and must deduct tax under Section 393(2), the buyer can use Form 141, Schedule E. TAN is not required solely for this specified transaction.
Companies, Firms and Other Buyers
Buyers who do not meet the prescribed Schedule E eligibility conditions cannot assume the same PAN-based relaxation. They must identify the applicable TAN-based TDS compliance procedure and fulfil their deduction, deposit and reporting obligations.
What Has Not Changed for the Buyer?
The obligation to deduct applicable TDS still exists. Form 141, Schedule E simplifies the reporting process for eligible buyers, but it does not remove the underlying TDS requirement on payments chargeable to tax in India.
The resident-property 1% TDS rule does not automatically apply to an NRI seller. The chargeable amount, applicable rates in force and any valid lower/nil deduction certificate or tax determination must be considered separately.
A lower TDS certificate is not automatic. Approval depends on the prescribed application, relevant income computation, supporting documents and applicable legal conditions.
How to Deduct TDS When Buying Property from an NRI
If you purchase immovable property from a non-resident seller, you must examine the applicable TDS provisions under Section 195 (Now Section 393(2)). The deduction depends on the sum chargeable to tax, applicable rates in force and any valid lower/nil deduction certificate or appropriate-sum determination.
Verify the Seller and Transaction
Confirm the seller's residential status under Indian income-tax law, PAN, ownership details, property documents and sale consideration. NRI status alone does not determine tax residency.
Determine the Applicable TDS
Review whether the payment contains income chargeable to tax in India, the applicable rates, surcharge and cess, and any valid certificate or Assessing Officer determination. Do not automatically apply 1% TDS.
Deduct, Deposit and Report
Deduct tax at the applicable time and complete deposit and reporting. From 1 October 2026, eligible resident Individual/HUF purchasers can use Form 141, Schedule E without obtaining TAN for this transaction. Other purchasers follow the applicable TAN-based reporting requirements.
TDS Calculation Examples: With and Without a Lower Deduction Certificate
Both examples use hypothetical rates. They demonstrate the arithmetic only and do not represent prescribed TDS rates for actual NRI property transactions.
Example 1: Without a Lower TDS Certificate
Assumed withholding rate for illustration
Assumes withholding on the full ₹1.20 crore at an effective rate of 13%. This percentage is purely illustrative and must not be applied to a real transaction without determining the correct legal basis.
Example 2: With a Valid Lower TDS Certificate
Assumed certificate authorizes 2% withholding
Assumes the seller has a valid lower deduction certificate authorizing 2% on the covered payment. The buyer must check the certificate's validity, scope and conditions.
Why Can a Lower TDS Certificate Matter?
In these two examples, the difference in tax withheld is ₹13,20,000. A valid lower deduction certificate may improve the seller's immediate cash flow, while allowing the buyer to follow the deduction rate authorized by the Income Tax Department. This difference is not a reduction in the seller's final income-tax liability.
Buying Property from a Resident Seller
Qualifying resident-property purchases generally fall under Section 194-IA (Now Section 393(1), Table Sl. No. 3(i)). The 1% TDS and applicable ₹50 lakh threshold conditions may apply. Reporting is through Form 141, Schedule B.
Buying Property from a Non-Resident Seller
Chargeable payments to non-resident sellers are examined under Section 195 (Now Section 393(2), Table Sl. No. 17). There is no equivalent general ₹50 lakh threshold. Eligible resident Individual/HUF purchasers use Form 141, Schedule E.
Important: NRI Property TDS Is Not a Flat Rate
The figures above are numerical examples, not a recommendation to deduct 13% or 2% from an actual property payment. The correct deduction depends on the amount chargeable, applicable tax rules and valid certificates or determinations.
Under the Income-tax Act, 2025, Section 395(1) provides for lower or nil deduction certificates for qualifying payees. Section 395(2) separately permits a payer to seek determination of the appropriate chargeable proportion of a payment to a non-resident. These procedures are different and should not be treated as interchangeable.
For further background on the buyer's obligations, see our detailed guide on TDS on property purchase from NRI.
Which TDS Return Form Should the Buyer Use?
Form 141, Schedule E: From 1 October 2026, a resident Individual/HUF buying immovable property from a non-resident seller can use this PAN-based challan-cum-statement for eligible transactions, without TAN.
Form 144: This quarterly TDS statement is relevant to other applicable TAN-based non-resident payments and to transactions governed by the earlier reporting process. For details, read our guide on the Form 144 TDS return for non-residents.
The applicable form depends on the buyer's status, deduction period and transaction. The Form 141 change should not be interpreted as eliminating Form 144 for every non-resident TDS case.
Capital Gains Tax & Exemptions When Buying Property from an NRI
When you purchase property from a non-resident seller, the seller may be eligible for capital-gains exemptions. However, the seller's eventual capital-gains liability and the buyer's TDS obligation are separate matters. Understanding this distinction helps prevent incorrect tax deduction during the transaction.
Does a Capital-Gains Exemption Mean the Buyer Can Deduct Less TDS?
Not automatically. An NRI seller may expect to claim an exemption through a qualifying reinvestment, but that expectation alone does not authorise the buyer to reduce withholding. The buyer should assess TDS under Section 195 (Now Section 393(2)) and follow any valid lower/nil deduction certificate or appropriate-sum determination.
Sale of a Long-Term Residential House
The NRI seller may claim relief through qualifying investment in another residential house in India.
Section 54 (Now Section 82) can apply to an eligible individual or HUF selling a long-term residential property and reinvesting in a qualifying house.
- The original asset must be a long-term residential house.
- Purchase a qualifying residential house in India within one year before or two years after the original sale.
- Alternatively, construct the new residential house within three years after the sale.
- The exemption is generally limited to the qualifying capital gain and eligible reinvestment, subject to the ₹10 crore investment ceiling.
- A one-time two-house option may apply where eligible capital gains do not exceed ₹2 crore, subject to conditions.
Sale of Other Long-Term Capital Assets
Relevant when the NRI seller transfers a qualifying asset other than a residential house and reinvests in an Indian residential house.
Section 54F (Now Section 86) may apply to an eligible individual or HUF selling qualifying long-term capital assets other than a residential house.
- The original asset must be a qualifying long-term capital asset other than a residential house.
- Invest in a qualifying residential house situated in India.
- Purchase within one year before or two years after the sale, or construct within three years after the sale.
- Full exemption generally requires qualifying investment of the relevant net sale consideration, not merely the gain.
- Partial reinvestment can give proportionate relief, subject to ownership restrictions and the ₹10 crore investment cap.
Property Reinvestment Deadlines for Eligible NRI Sellers
The exemption provisions provide specific timelines for purchasing or constructing a qualifying residential house.
Purchase Before Sale
A qualifying new house purchased within one year before the original asset's transfer can count towards the relevant exemption.
New House Purchase
Purchase the qualifying residential house within two years after the original asset is transferred.
House Construction
Qualifying construction must satisfy the three-year time limit after transfer of the original asset.
Buyer's Responsibility
Verify whether the payment is subject to TDS, determine the applicable withholding treatment, and follow any valid certificate or determination. Do not reduce TDS merely because the seller plans to reinvest the sale proceeds.
NRI Seller's Responsibility
Calculate the applicable capital gain, maintain purchase and improvement records, verify exemption eligibility, and comply with reinvestment conditions. Where appropriate, apply for a lower/nil TDS certificate before the relevant deduction event.
What If the NRI Seller Has Not Yet Reinvested?
The Capital Gains Accounts Scheme (CGAS) may be relevant where qualifying sale proceeds or gains have not been reinvested within the applicable time before the return-filing deadline. Deposit amounts, deadlines and subsequent use of the funds must meet the applicable exemption conditions.
For the buyer: An intention to invest later, or a proposed CGAS deposit, does not by itself remove the buyer's withholding obligation. Any reduction in deduction must have an appropriate legal basis.
2026 tax-law clarification: For long-term property transferred on or after 23 July 2024, the general capital-gains tax framework is 12.5% without indexation, subject to the applicable provisions. The protective comparison with 20% tax using indexation for eligible pre-23 July 2024 property is available to specified resident individuals/HUFs, not automatically to non-resident sellers.
Under the Income-tax Act, 2025, Section 54 (Now Section 82) and Section 54F (Now Section 86) govern the respective reinvestment exemptions for applicable tax years. The seller's potential exemption does not automatically alter TDS under Section 195 (Now Section 393(2)).
DTAA Rules When Buying Property from an NRI
When you buy property in India from a non-resident seller, the seller's overseas tax residency may make a Double Taxation Avoidance Agreement (DTAA) relevant. However, the DTAA does not automatically reduce or remove the buyer's obligation to deduct applicable TDS in India.
Relief from Double Taxation
If the NRI seller's property-sale gain is taxable in India and another jurisdiction, the applicable treaty and foreign tax credit rules may help avoid double taxation. This relief does not automatically reduce Indian property TDS.
Tax Residency Documentation
A seller seeking treaty benefits in India generally needs a valid Tax Residency Certificate (TRC). Prescribed information may also be furnished through Form 10F (Now Form 41), where applicable. The buyer must check the documentation relevant to the claimed tax treatment.
Country-Specific Treaty Rules
Each DTAA has its own rules on capital gains, taxing rights and double-taxation relief. Gains from immovable property situated in India are generally taxable in India, subject to the applicable treaty and domestic law. Do not assume that every treaty offers a reduced Indian rate.
Practical Example: Buying an Indian Property from a US Tax Resident
The Transaction
Priya is an Indian resident buying a flat located in India from Rahul, an Indian citizen who is non-resident for Indian income-tax purposes and a US tax resident.
How the DTAA Applies
Under Article 13 of the India–USA DTAA, both countries may tax capital gains in accordance with their domestic laws. Therefore, Rahul's US tax residency does not automatically exempt the gain from Indian tax. Rahul may need to examine available relief under applicable US tax-credit rules.
What Must the Buyer Do?
Priya must independently assess applicable TDS under Section 195 (Now Section 393(2)). If the transaction is covered by the 1 October 2026 procedure and Priya qualifies as an eligible resident individual buyer, she can use Form 141, Schedule E to report and pay the applicable TDS. A seller's TRC alone does not authorise nil withholding.
How Should Buyers Check DTAA Claims?
Use these checks before applying any treaty-based treatment to a payment for an Indian property purchased from a non-resident seller.
Confirm Seller's Tax Residency
Identify the seller's Indian residential status and claimed treaty country of residence. Check the relevant TRC, overseas tax identification and supporting documents where required.
Examine the Relevant DTAA
Review the treaty's capital gains article, applicable limitations and methods for eliminating double taxation. Distinguish relief available to the seller from the buyer's Indian withholding rules.
Verify the TDS Basis
Assess the amount chargeable to Indian tax, applicable rates in force and any valid lower/nil deduction certificate or chargeable-sum determination. Follow the prescribed deduction, payment and reporting procedure.
Important: TRC or Form 41 Does Not Automatically Remove Property TDS
A Tax Residency Certificate and Form 10F (Now Form 41) support the seller's treaty-related claim where applicable. They do not, by themselves, prove that gains from an Indian property are exempt from Indian income tax or authorise the buyer to deduct tax at zero.
For the specified Form 141 Schedule E procedure, the buyer should also furnish the required seller details, including foreign residential address, TRC and tax identification information, as applicable. Failure to furnish prescribed identification information may trigger higher-rate deduction requirements.
Income-tax Act, 2025: Section 90 (Now Section 159) provides the relevant treaty-relief framework. Form 10F (Now Form 41) is used for prescribed non-resident disclosures under the Income-tax Rules, 2026. For payments chargeable to tax in the hands of a non-resident seller, Section 195 (Now Section 393(2)) remains the relevant withholding provision. These issues must be evaluated separately for the applicable tax year.
Compliance Checklist for Buying Property from an NRI
When purchasing immovable property from a non-resident seller, the buyer is responsible for determining, deducting, depositing and reporting applicable Tax Deducted at Source (TDS). The NRI seller must provide relevant documents and separately assess their capital-gains tax and income-tax return obligations.
| Compliance Step | Property Buyer | NRI Seller |
|---|---|---|
| Verify Seller's Tax Residency | Verify Confirm whether the seller qualifies as a non-resident under Indian income-tax law. Apply Section 195 (Now Section 393(2)) where relevant, rather than automatically using the resident-seller property TDS provision. | Provide Share residential-status information and supporting documentation for the relevant tax year. |
| Collect PAN and Property Documents | Collect the seller's PAN or other prescribed identification details, ownership records, sale agreement, property particulars, co-owner information and payment schedule. Check higher-deduction rules where the required identification details are unavailable. | Provide available PAN, title documents, acquisition details, relevant tax records and foreign residential information where required. |
| Determine Applicable TDS | Evaluate the amount chargeable to Indian tax, applicable rates in force, surcharge, cess and any valid deduction certificate or appropriate-sum determination. Do not independently use an unsupported flat withholding rate. | Prepare records of acquisition cost, improvements, holding period and eligible transfer expenses. These help support capital-gains computation and relevant applications. |
| Check Lower / Nil TDS Certificate | Verify that any certificate covers the correct seller, transaction, payment, rate and validity period. Deduct in accordance with its terms. | Where eligible, apply sufficiently early under Section 197 (Now Section 395(1)) using the prescribed application procedure. Approval is not automatic. |
| Deduct Tax at the Correct Time | Deduct applicable tax at the statutory payment or credit stage under Section 195 (Now Section 393(2)). Check the treatment of instalments and advances before making payments. | Confirm the tax withheld from each relevant payment and retain the payment and deduction records. |
| Deposit TDS and File Statement | Deposit the deducted tax within the prescribed deadline and submit the applicable statement. From 1 October 2026, eligible resident individual/HUF purchasers may use Form 141, Schedule E without obtaining TAN solely for the specified transaction. Other buyers follow applicable TAN-based procedures. | Verify that the buyer has reported the deduction against the correct identification details and transaction amount. |
| Provide TDS Certificate | Download or issue the applicable prescribed TDS certificate after completing the reporting process, and make it available to the seller. | Obtain the certificate and reconcile the deducted tax against the applicable Indian tax-credit records. |
| Income-Tax Return and Refund | Complete the property's TDS-related obligations. Purchasing property does not, by itself, generate a capital gain for the buyer. | Assess whether an Indian income-tax return is required or appropriate. Report taxable gains, claim eligible exemptions, reconcile TDS credit and claim any eligible refund. |
| Review DTAA Documentation | Do not automatically reduce Indian withholding merely because the seller provides a foreign Tax Residency Certificate. | Review relevant treaty benefits and keep a Tax Residency Certificate and Form 10F (Now Form 41) where required. |
5 Common Mistakes When Buying Property from an NRI
A buyer can face tax-compliance complications if the seller's residency, deduction basis or reporting process is incorrect.
Applying the Resident Seller's 1% TDS
The ordinary 1% property TDS provision is not automatically applicable when the seller is non-resident. Check Section 195 (Now Section 393(2)) and the amount chargeable to tax before making payment.
Assuming Indian Citizenship Means Tax Residency
Indian citizenship, PAN, Aadhaar or property ownership does not by itself determine the seller's Indian income-tax residency. Confirm the correct residential status for the relevant tax year.
Reducing TDS Without a Valid Basis
A seller's estimated capital gain, intention to reinvest or expected tax refund does not automatically permit lower withholding. Apply the statutory deduction rules and any valid lower/nil certificate or tax determination.
Filing the Wrong TDS Statement
Form 141, Schedule E is available from 1 October 2026 to eligible resident individual/HUF buyers. Companies, firms and other buyer categories outside its scope must continue using the applicable TAN-based procedure.
Assuming DTAA Benefits Remove TDS
A DTAA may offer relief from double taxation, but gains from Indian immovable property are generally taxable in India, subject to the applicable law and treaty. A foreign TRC alone does not automatically authorise zero deduction.
NRI Seller's ITR Filing and Foreign Asset Reporting
After the property purchase is completed, the buyer should retain the sale agreement, TDS payment details and applicable TDS statement records. The non-resident seller should separately calculate any taxable capital gain, verify available TDS credit and assess Indian ITR filing and refund requirements.
Foreign asset reporting depends on the taxpayer's Indian residential status. A person who is Non-Resident (NR) or Resident but Not Ordinarily Resident (RNOR) is generally not required to complete Schedule FA in an Indian income-tax return. However, someone classified as Resident and Ordinarily Resident (ROR) may need to disclose reportable overseas accounts, investments and other foreign assets, even if they generated no income.
For eligibility, residential-status rules and reporting requirements, read Easy Return's guide to declaring foreign assets in ITR.
Conclusion: NRI Property Sale TDS in 2026
Selling property in India as an NRI involves more than calculating capital gains tax. Understanding the buyer's TDS obligations, recent compliance changes and available tax relief can help you plan the transaction more effectively.
Understand Updated TDS Rules
Section 195 (Now Section 393(2)) applies to chargeable payments made to non-resident sellers. From 1 October 2026, eligible resident individual/HUF buyers can use Form 141, Schedule E without TAN.
Consider a Lower TDS Certificate
A lower/nil deduction certificate may reduce unnecessary withholding where the seller satisfies the applicable conditions. Apply before the relevant deduction event where appropriate.
Review Capital Gains Exemptions
Qualifying reinvestment relief under Section 54 (Now Section 82) or Section 54F (Now Section 86) may reduce taxable capital gains. Eligibility depends on the property, reinvestment and statutory conditions.
Complete Post-Sale Tax Compliance
Reconcile TDS credit, determine whether an Indian ITR is required, report taxable gains and claim any eligible relief or refund. Keep the sale deed, acquisition records and supporting tax documents.
Remember: The amount deducted by the buyer is not necessarily your final capital gains tax. An accurate tax computation, appropriate documentation and timely compliance can help avoid unnecessary withholding and reduce the risk of filing mistakes.
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Frequently Asked Questions: TDS on Sale of Property by NRI
Answers to common questions about excess TDS, TAN, foreign remittances, lower deduction certificates, jointly owned properties and DTAA documentation under the 2026 rules.
01 What if TDS is higher than my actual capital gains tax?
If eligible, an NRI seller can apply for a lower or nil TDS certificate before the relevant deduction event under Section 197 (Now Section 395(1)).
If excess TDS has already been deducted, the seller can generally claim eligible TDS credit and request a refund through an Indian income-tax return, subject to return filing and refund rules. A lower deduction certificate issued later does not automatically reverse earlier deductions.
02 Does a property buyer need a TAN for NRI TDS in 2026?
It depends on the buyer category. From 1 October 2026, eligible resident individual and HUF buyers purchasing immovable property from a non-resident seller can use Form 141, Schedule E through their PAN login, without obtaining a TAN solely for this transaction.
Companies, firms and other purchasers who are not eligible for Schedule E must follow the applicable TAN-based TDS compliance process.
03 How can an NRI repatriate Indian property-sale proceeds abroad?
Repatriation is governed by applicable FEMA and RBI regulations, the manner in which the property was acquired or funded, the type of bank account and Indian tax compliance.
Depending on the circumstances, proceeds may be eligible for repatriation through the original foreign-exchange investment route or the applicable USD 1 million per financial year NRO remittance facility, subject to the prescribed conditions.
Form 15CA (Now Form 145) and Form 15CB (Now Form 146) relate to specified outward remittance declarations and accountant certification, where applicable. They are not the buyer's property-sale TDS statement. The authorised dealer bank should confirm the required documents before the transfer.
04 What changed under the Income-tax Act, 2025 for NRI property transactions?
Section 195 of the Income-tax Act, 1961 corresponds to Section 393(2) of the Income-tax Act, 2025 for applicable payments to non-residents.
A key procedural change took effect on 1 October 2026: eligible resident individual/HUF buyers can file Form 141, Schedule E for qualifying NRI property transactions.
Separately, Form 145 and Form 146 are the updated counterparts of Forms 15CA and 15CB for specified foreign remittances. They should not be confused with Form 141.
05 What if I did not apply for lower TDS before the sale?
If a lower deduction certificate was not obtained before the applicable payment or credit event, the buyer must generally follow the deduction requirements then in force.
Where excess TDS has been deposited, the seller may seek a refund by filing an appropriate Indian income-tax return and claiming eligible TDS credit. The refund amount depends on the actual tax liability, available credits and processing outcome.
06 What happens if a property has both resident and NRI co-owners?
The buyer should identify the residential status and ownership or consideration share of each seller.
Payments attributable to a resident co-owner may fall under Section 194-IA (Now Section 393(1), Table Sl. No. 3(i)), subject to its threshold and conditions.
Payments attributable to a non-resident co-owner should be examined under Section 195 (Now Section 393(2)). The buyer must follow the correct allocation, deduction and reporting process for each co-owner.
07 How early should an NRI apply for a lower TDS certificate?
Apply well before the first relevant payment or credit event. There is no universal guaranteed four-to-six-week approval period.
Preparation may involve the property's purchase documents, estimated capital-gains computation, sale agreement, tax records and supporting evidence.
For Tax Year 2026–27, the application under Section 395(1) is made using Form 128, with approval and certificate terms determined by the Assessing Officer.
08 Is there a ₹50 lakh TDS threshold when the property seller is an NRI?
No general ₹50 lakh property threshold applies under the non-resident payment provision, unlike the prescribed threshold for qualifying purchases from resident sellers.
However, TDS under Section 195 (Now Section 393(2)) depends on whether the payment contains an amount chargeable to income tax in India. The correct deduction basis and rate must be determined according to the transaction, applicable law, any tax treaty and valid certificate or determination.
09 Which documents are required to claim DTAA benefits on an NRI property sale?
An eligible non-resident seeking treaty benefits in India generally requires a valid Tax Residency Certificate (TRC) from the foreign tax jurisdiction.
Additional prescribed information may need to be furnished through Form 10F (Now Form 41), together with other supporting documents where required.
Important: A TRC or DTAA claim does not automatically exempt capital gains from an Indian property sale or eliminate the buyer's TDS obligation.
2026 tax law note: For transactions governed by the Income-tax Act, 2025, the relevant TDS provisions and notified Income-tax Rules, 2026 apply. Earlier periods may continue to be governed by the corresponding Income-tax Act, 1961 provisions. The buyer's TDS obligation, seller's final capital-gains liability, foreign-remittance requirements and treaty-relief eligibility are separate compliance questions.
CA Sagar Batra
ICAI Registered Chartered Accountant · 10+ Years of Professional Experience · 12,000+ Tax Filings
Chartered Accountant with experience in taxation, compliance and business advisory. His work covers Income Tax, GST, TDS, tax notices, business compliance and financial documentation for individuals and businesses across India.