NRI
TDS on NRI Property Sale: the 2026 Rules
TDS on an NRI property sale under Section 393(2) (formerly 195): the rate, how it is computed on full consideration, and how to reduce it lawfully.
By ValuerDekho editorial team · Reviewed by Reviewing Chartered Accountant (to be named) · Updated 6 September 2026
The rule
When a buyer pays a non-resident for immovable property in India, Section 393(2) of the Income-tax Act 2025 (formerly Section 195) requires tax to be deducted at source on the entire consideration, at the rate applicable to the seller’s gain, before payment. The buyer deposits the tax, files Form 27Q, and issues Form 16A to the seller.
Rates in 2026
| Holding period | Base rate | With surcharge and 4% cess (typical) |
|---|---|---|
| More than 24 months (long-term) | 12.5% | About 14.3% to 15.6% depending on the surcharge slab |
| 24 months or less (short-term) | Slab rate up to 30% | About 31.2% to 35.9% |
Because deduction is on the full price, a ₹2 crore sale attracts roughly ₹29 lakh of TDS even if the actual gain is ₹40 lakh and the tax on it ₹5 lakh. The excess is refundable only after the return is processed, often twelve to eighteen months later.
Reducing the deduction
Apply for a lower or nil deduction certificate under Section 397 (formerly 197) in Form 13 on TRACES before the sale deed. The application needs the agreement, the seller’s cost evidence and the capital gains computation. A registered valuer’s FMV 2001 report or inheritance-date valuation is the cost evidence for old or inherited property. See the lower-deduction guide.
The 2001 base and indexation
For transfers after 23 July 2024, long-term gains on property are taxed at 12.5% without indexation. The option to pay 20% with indexation on pre-July-2024 purchases is available only to resident individuals and HUFs. Non-residents therefore rely on the FMV as on 1 April 2001 (for pre-2001 property) to lift the cost base.
Buyer’s obligations
Obtain the seller’s PAN and residential status; deduct at the correct rate on each instalment; deposit by the 7th of the following month; file Form 27Q quarterly; issue Form 16A. Failure makes the buyer an assessee in default.
What ValuerDekho arranges
The valuer for the cost-base report, a CA for the Form 13 application and Forms 145/146 for repatriation, coordinated on WhatsApp in your time zone.
Frequently asked questions
Is TDS on the gain or on the full price?
On the full sale consideration, unless the seller obtains a lower-deduction certificate under Section 397.
Does the buyer need a TAN?
Historically yes for non-resident payments. Budget 2026 removed the TAN requirement for the lower-deduction route from 1 October 2026; check the current position with the buyer's CA.
Related guides
- Fair Market Value as on 1 April 2001 (FMV 2001)
- Forms 145 and 146: Repatriating Sale Proceeds
- Lower Deduction Certificate for NRIs (Form 13)
Last reviewed 6 September 2026 by Reviewing Chartered Accountant (to be named). Regulatory references are to the Income-tax Act 2025 and Income-tax Rules 2026 (in force from 1 April 2026) with the former 1961-Act section numbers in brackets. This is general information, not tax or legal advice.