How much TDS is deducted when an NRI sells property in India, and can it be reduced?

The rates

Add surcharge (10% if the sale price exceeds ₹50 lakh, 15% above ₹1 crore) and 4% cess. For a long-term sale above ₹1 crore, the effective rate is about 14.95%.

The rate applies to the sum chargeable to tax, the capital gain. Since the buyer usually cannot work out the gain, buyers commonly deduct on the whole sale price, unless the seller has a certificate.

Lower-deduction certificate

The seller can apply on TRACES in Form 13 (now Form 128) for a certificate that TDS be deducted only on the actual gain, or at a lower rate, for example where the seller is investing in another house or in bonds under section 54EC (now section 85).

• Apply well before the sale; the certificate names the buyer and the amount.
• Attach the purchase deed, cost and improvement evidence, the sale agreement, and the computation.

The buyer's duties

1. Get a TAN. Form 141 (formerly 26QB) cannot be used for a non-resident seller.
2. Deduct TDS at the time of payment or credit, whichever is earlier, including on any advance.
3. Deposit it by the 7th of the following month (30 April for March).
4. File the quarterly statement in Form 27Q (now Form 144).
5. Issue the TDS certificate in Form 16A (now Form 131) to the seller.

For the NRI seller

• File an ITR-2 to claim a refund if the TDS exceeds the actual tax.
• Repatriation: up to USD 1 million a financial year from the NRO account, with Forms 15CA and 15CB (now Forms 145 and 146).
• Joint sellers: TDS is worked out separately for each seller's share, depending on whether each is resident or non-resident.