Under Section 195, Indian buyers are legally obligated to deduct up to 31.2% tax on the gross sale consideration of NRI property. Our licensed Chartered Accountants compute your capital gains and procure a statutory Form 13 Lower/Nil TDS Certificate from TRACES before registry.
Comparison on ₹2.00 Crore property deed:
Unlike Resident Indian sales (where TDS is a standard 1% under Section 194-IA), NRI property transactions are strictly governed by Section 195 of the Income Tax Act, 1961. This mandates deduction on the entire sale value unless an official certificate is issued.
The buyer deducts tax on the entire agreement value, completely ignoring what you originally paid for the property, inflation indexation, or whether you made a profit or loss.
A massive portion of your sale proceeds is frozen in government accounts for 12 to 18 months, causing severe liquidity loss and depriving you of earning global interest.
You can only claim excess tax back by filing an ITR in the following financial year. Claiming large refunds of ₹20L+ frequently triggers Section 143(1) scrutiny inquiries.
Buyers are personally liable for 12% to 18% annual interest and penal damages if they fail to deduct full TDS. Hence, buyers strictly refuse lower deductions without an official certificate.
Under Rule 28AA, the Assessing Officer computes tax strictly on net gains (Sale Price minus Cost of Acquisition / Indexed Cost), reducing effective TDS to just 0% to 5%.
If you plan to reinvest capital gains into another residential property (Section 54) or Capital Gains Bonds (Section 54EC up to ₹50L), TDS is reduced to complete NIL (0%).
You receive your complete consideration credited directly into your NRO account at the sub-registrar office without losing a single rupee in excess withholding tax.
The Assessing Officer generates a digitally signed certificate on TRACES specifying the exact lower rate, giving the buyer 100% legal immunity against department inquiries.
| Transaction Parameter | Default Mandate (Section 195) | With Section 197 Order (Form 13) |
|---|---|---|
| Tax Calculation Base | Gross Sale Consideration (Total Deed Value) | Net Capital Gain (Sale Consideration minus Acquisition Cost) |
| Effective TDS Rate | 20.8% to 23.92% (up to 31.2% for STCG) | Typically 0% to 6% (based on actual capital gains) |
| TDS on ₹2.00 Crore Sale | ₹41,60,000 to ₹47,84,000 | ₹0 to ₹12,48,000 |
| Time to Recover Excess Funds | 12 to 18 months via refund filing in ITR | Immediate Liquidity on the day of Sale Deed registration |
| Buyer TAN Requirement | Mandatory TAN required by buyer | Buyer uses TAN to credit approved lower TDS on TRACES |
See how our CA desk saved an NRI residing in Dubai over ₹35 Lakhs in upfront withheld tax upon selling a residential apartment in Bengaluru.
Our Chartered Accountants strictly operate within the provisions of the Income Tax Act, 1961, ensuring seamless compliance for both the NRI seller and the buyer.
Mandates that any person responsible for paying sums to a Non-Resident must deduct income tax at source at the rates in force, covering the entire gross consideration.
Empowers the Assessing Officer (AO) to issue a statutory certificate directing the buyer to deduct tax at a lower rate or NIL rate based on estimated income computations.
Provides 100% statutory exemption when gains are invested in residential property (Sec 54) or long-term specified bonds in REC/PFC/NHAI up to ₹50 Lakhs (Sec 54EC).
For properties acquired prior to July 23, 2024, resident and non-resident individuals can choose between 12.5% LTCG without indexation vs 20% with indexation, whichever is lower.
Our CA team reviews, audits, and formats these documents before electronic submission on the TRACES portal:
Our CA drafts the legal tax calculation sheet factoring indexed cost of acquisition and applicable exemptions.
We file Form 13 online under the NRI jurisdiction and submit all statutory documentary annexures.
We respond to department queries, clarify valuation reports, and expedite jurisdictional approval.
Download the digitally signed Section 197 certificate. Buyer deducts lower TDS, and sale deed completes safely.
Beyond property sales, our licensed Chartered Accountants provide complete cross-border tax defense, relocation shielding, and RBI-compliant banking services.