Effective TDS rates on NRI property sales
Surcharge on long-term capital gains is capped at 15%; for short-term gains taxed at normal rates, higher surcharge can apply above ₹2 crore of income.
| Amount (as buyers usually apply it) | LTCG (12.5% + surcharge + cess) | STCG (30% + surcharge + cess) |
|---|---|---|
| Up to ₹50 lakh | 13.00% | 31.20% |
| ₹50 lakh – ₹1 crore (10% surcharge) | 14.30% | 34.32% |
| Above ₹1 crore (15% surcharge) | 14.95% | 35.88% |
Lower deduction certificate
The NRI seller can apply online to the Assessing Officer for a certificate to deduct TDS only on the actual gain, or at a lower rate, when the gain is small or will be exempt under Section 54/54EC. It takes a few weeks, so apply before the sale agreement fixes the payment date.
Buyer's obligations
- Obtain a TAN (not needed when buying from a resident)
- Deduct TDS at the time of payment or credit, whichever is earlier
- Deposit by the 7th of the next month and file the non-resident TDS return
- Issue the TDS certificate to the seller
- Buying from a resident instead: 1% TDS if price is ₹50 lakh or more, via Form 141 (formerly 26QB), no TAN needed
Worked example: NRI selling a flat for ₹90 lakh
- 1Bought for ₹50 lakh in 2015, sold for ₹90 lakh — long-term gain ₹40 lakh (no indexation for NRIs).
- 2Without a certificate, the buyer deducts 14.3% of ₹90 lakh = ₹12.87 lakh.
- 3Actual tax on the ₹40 lakh gain (no surcharge at this income) = 13% × ₹40 lakh = ₹5.2 lakh.
A lower deduction certificate avoids about ₹7.7 lakh being locked up until the refund.
