Key points
- Buyers must deduct TDS under section 393(2), which replaced section 195 from 1 April 2026.
- Long-term property: 12.5% plus surcharge and cess (13% to 14.95%). Short-term: 30% plus surcharge and cess (31.2% to 39%).
- Buyers usually deduct on the full sale price, which often means far more TDS than your real tax.
- A lower-deduction certificate on Form 128 brings TDS down to your actual liability.
How TDS works when an NRI sells property
When you sell property in India as an NRI, the buyer has to deduct tax at source (TDS) before paying you and deposit it with the government. Under the Income-tax Act, 2025 this is section 393(2), which replaced the familiar section 195 from 1 April 2026. The 1% TDS that applies when a resident sells property does not apply to NRI sellers.
TDS rates for tax year 2026-27
| Type of gain | Base rate | Effective rate with surcharge and 4% cess |
|---|---|---|
| Long-term (held more than 24 months) | 12.5% | 13% (sale up to ₹50 lakh) · 14.3% (₹50 lakh–₹1 crore) · 14.95% (above ₹1 crore, surcharge capped at 15%) |
| Short-term (held 24 months or less) | 30% | 31.2% (up to ₹50 lakh) · 34.32% (₹50 lakh–₹1 crore) · 35.88% (₹1–2 crore) · 39% (above ₹2 crore) |
The big catch: TDS on the full sale price
Tax is only due on your gain, but buyers usually deduct TDS on the entire sale price. They don't know your purchase cost and don't want to risk a penalty. On a ₹1.2 crore sale with a ₹60 lakh gain, that can lock up around ₹9 lakh more than your actual tax until you file a return and get a refund.
How to avoid excess TDS: the lower-deduction certificate
Before the sale, apply to the Income Tax Department for a certificate allowing TDS on your actual gain. Under the new Act this is section 395, Form 128 (previously section 197, Form 13). Apply online through TRACES with your sale agreement, purchase documents and computation. It typically takes a few weeks, so apply as soon as you have a buyer.
Recent changes
- New forms: Form 15CA/15CB, used to repatriate sale money abroad, are now Forms 145 and 146.
- Budget 2026: Resident individual buyers may no longer need a TAN to deduct TDS for an NRI seller and can use their PAN instead. This is reported to apply from 1 October 2026, so confirm the current procedure with your buyer's CA.
Example
Rahul, an NRI in Sydney, sells a Pune flat for ₹1.2 crore. He bought it in 2015 for ₹60 lakh.
- Long-term, sale above ₹1 crore → effective TDS 14.95% × ₹1.2 crore = ₹17.94 lakh
- Actual tax: ₹60 lakh gain × 12.5% + 10% surcharge + 4% cess = ₹8.58 lakh
- Without a certificate, Rahul waits for a refund of about ₹9.36 lakh. With one, he keeps it from day one.
Frequently asked questions
What is the TDS rate on property sold by an NRI in 2026-27?
Is TDS deducted on the sale price or the capital gain?
Who deposits the TDS?
Can I get excess TDS back?
Is the 1% TDS under the old section 194-IA applicable to NRIs?
Does a jointly owned property change the TDS?
Read next
- Lower TDS certificate (Form 128) for NRIs
- Repatriating property sale money abroad
- Do NRIs need to file a tax return in India?
A chartered accountant who works with NRIs can get a lower-TDS certificate, file your return and handle repatriation paperwork.
Sources
- Income-tax Act, 2025 (Income Tax Department)
- TRACES: TDS reconciliation portal
- Income Tax e-filing portal
Important: This calculator gives an estimate based on the Income-tax Act, 2025 as we understand it on 25 October 2026. It doesn't replace advice from a chartered accountant. See our disclaimer.