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NRI property sale: what gets withheld, and what you actually owe

The buyer withholds against the whole sale price. You are taxed on the gain. This is the difference, and how long it sits with the government.

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Reviewed by Deepak Middha, Chartered Accountant (ICAI membership no. 125458) · September 2026Editorial policy

The whole consideration in the agreement. This is what the buyer has to withhold against.

Cost of acquisition. No indexation — a non-resident cannot take the 20%-with-indexation option.

More than 24 months makes it long-term. Exactly 24 does not.

Enter the three figures above. Nothing is sent anywhere and nothing is saved — close the tab and it is gone.

Quick answer

A buyer must withhold against the whole sale price, not your gain — roughly 13% to 14.95% of the consideration on a long-term sale. Your actual tax is 12.5% plus surcharge and cess on the gain alone. On a modestly appreciated property the first is often five to ten times the second, and the difference is locked up until you are refunded.

Key takeaways

  • Withholding is computed on the sale consideration; your tax is computed on the gain. That single difference is where the money goes.
  • A non-resident cannot use the 20%-with-indexation option. It was extended only to resident individuals and HUFs, so the rate is a flat 12.5% without indexation.
  • More than 24 months makes the gain long-term. Exactly 24 months does not.
  • A certificate for lower or nil deduction is the only way to close the gap at source — afterwards, the only route is a refund.
  • Everything here runs in your browser. No figure is sent anywhere or stored.

How the calculation works, in plain English

Two sums, on two different bases. That is the whole of it, and the difference between the bases is the reason this tool exists.

The buyer's sum. When the seller is a non-resident, the buyer must deduct tax before paying, and the deduction is computed on the entire amount they are paying — the sale consideration. Not the profit. The whole price. On a long-term sale the base rate is 12.5%, to which a surcharge is added if the amount crosses a threshold, and a health and education cess of 4% is added on top of tax plus surcharge.

Your sum. Your liability is on the capital gain — the sale price less what the property cost you. Same base rate of 12.5%, same surcharge structure, same cess. But the base is a fraction of the sale price, so the tax is a fraction of the withholding.

The gap between them is not a penalty and it is not lost. It is your money, held by the government, recoverable by filing a return and claiming the refund — which realistically means the following assessment year at the earliest, and often longer.

The arithmetic, side by side
What the buyer withholdsWhat you actually owe
Computed onThe whole sale considerationThe capital gain only
Base rate, long-term12.5%12.5%
Base rate, short-term30% — buyers withhold at the top slabYour own slab rate, which may be far lower
Surcharge banded onThe sale price, because the buyer does not know your incomeYour income, for which the gain is the closest proxy available here
Cess4% on tax plus surcharge4% on tax plus surcharge
When it is settledAt the moment of saleWhen you file the return for that year

This is why the two sides of the tool use the same slabs against different bases. It is not an approximation — it is what actually happens.

The rates, and the one that is usually quoted wrongly

For transfers on or after 23 July 2024, long-term capital gain on immovable property is charged at 12.5% without indexation. The option to compute at 20% with indexation instead, for property acquired before that date, was extended by the Finance Act 2024 only to resident individuals and Hindu undivided families. A non-resident cannot take it.

This is the most common error in competing material, and it is not a historical one: pages updated as recently as September 2026 still apply 20% with indexation to an NRI seller. On an old, heavily appreciated property that overstates the liability substantially — and, worse, it tells the seller the withholding is closer to their real tax than it actually is, which is exactly the belief that stops people applying for a certificate.

Effective withholding rates on a long-term sale
Sale considerationSurchargeEffective rateOn ₹1 crore
Up to ₹50 lakhNil13.00%—
Above ₹50 lakh, up to ₹1 crore10%14.30%—
Above ₹1 crore15%14.95%₹14,95,000

12.5% × (1 + surcharge) × 1.04. Surcharge on long-term capital gain is capped at 15%. Thresholds bite on 'exceeds', so an amount landing exactly on a threshold stays in the lower band. Rates as in force on the date shown on this page.

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Short-term is worse, and less predictable

Held for 24 months or less, the gain is short-term and taxed at your slab rate — but the buyer does not know your slab, so they withhold at the top of it, 30% plus surcharge and cess. The figure this tool shows for a short-term liability is therefore an upper bound rather than an estimate: your real liability could be considerably lower, which makes the gap larger, not smaller.

Closing the gap: the certificate, and when to apply

There is exactly one way to stop the over-withholding at source, and it is an application to the Assessing Officer for a certificate authorising deduction at a lower rate or at nil. With the certificate in hand, the buyer deducts against your actual expected liability rather than against the sale price.

Form 15G and Form 15H, which residents use to stop deduction on interest, are not available to non-residents and are irrelevant here. The certificate is the whole mechanism.

Timing decides whether it works. Processing commonly takes somewhere between a month and three, and the certificate is worthless once the buyer has already deducted and deposited — at that point the only remaining route is a refund, which is slower than the certificate would have been. Apply as soon as the agreement to sell is signed, and preferably before.

  1. 1Get a PAN if you do not have one. Nothing else is possible without it, and a missing PAN triggers withholding at a higher rate again.
  2. 2Get the buyer's TAN. A buyer purchasing from a non-resident needs one, and many individual buyers do not realise this and have not got one. Their delay becomes your delay.
  3. 3Assemble the cost evidence: the original purchase deed, proof of payment, and documents for any improvement you intend to claim.
  4. 4Apply, with the draft agreement to sell and the computation of expected gain.
  5. 5Allow a month to three, and chase. Nothing about this process is fast, and the sale usually is.
  6. 6Give the certificate to the buyer before they pay. A certificate obtained after deduction has no retrospective effect.

If it has already been withheld

Where the money has gone, it is a refund rather than a correction, and the sequence is ordinary but slow.

You file a return for the year of sale, declaring the capital gain and claiming credit for the tax withheld. Processing determines the refund. It reaches the bank account you have pre-validated on the portal — which, for a non-resident, is the step that most often goes wrong, because the account has to be validated and a foreign address complicates it.

Before filing, check that the withholding actually appears in your tax credit statement. It appears only when the buyer has both deposited the money and filed the statement reporting it against your PAN, and an individual buyer doing this for the first time frequently gets one or both wrong. If it is not showing, that is a problem to solve before filing, not after.

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The cost of the delay is real money

Interest on a refund is not generous, and on a large withholding the gap between what you could have earned on that capital and what the refund carries is often larger than the professional fee for obtaining a certificate. Comparing those two numbers is usually what settles the question of whether to apply.

What this tool deliberately leaves out

It models the withholding gap, which is a narrow and answerable question. It is not a computation of your final tax, and several things that can move your real liability are not in it.

  • Exemptions for reinvestment in another residential property or in specified bonds, which can reduce the liability substantially or to nil.
  • Cost of improvement, and expenses of transfer such as brokerage and legal costs, all of which reduce the gain.
  • Any other income you have in India, which affects the surcharge band on your own side of the calculation.
  • Capital losses available for set-off, whether from this year or carried forward.
  • Relief under a double taxation treaty, where the other country also taxes the gain.
  • Joint ownership, where the consideration and the gain are apportioned between owners and each owner's bands are worked out separately.
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Why leaving them out is the honest choice

None of them changes what the buyer must withhold, which is the number this page exists to show you. Including them would produce a figure that looks like your final tax bill and is not one — and a tool that appears to compute a liability it cannot see is worse than one that answers a narrower question accurately.

Worked examples

Example 1: A modestly appreciated flat — the ordinary case

Sale price
₹1,50,00,000
Cost
₹1,10,00,000
Held
5 years
Gain
₹40,00,000
  1. 1.Held more than 24 months, so long-term. Base rate 12.5%.
  2. 2.Withholding: the consideration is ₹1.5 crore, which exceeds ₹1 crore, so surcharge is 15%. 12.5 × 1.15 × 1.04 = 14.95%. On ₹1,50,00,000 that is ₹22,42,500.
  3. 3.Liability: the gain is ₹40,00,000, which is below ₹50 lakh, so no surcharge. 12.5 × 1.04 = 13%. On ₹40,00,000 that is ₹5,20,000.
  4. 4.The difference is ₹17,22,500.
Result

₹17,22,500 locked up — the buyer withholds 4.3 times the real liability. On a property that has gone up by less than 40%, over four fifths of what is withheld is refundable. This is the case the certificate exists for.

Example 2: A property sold at a loss — the worst ratio of all

Sale price
₹50,00,000
Cost
₹60,00,000
Held
3 years
Gain
A loss of ₹10,00,000
  1. 1.Long-term, and the consideration of ₹50,00,000 is exactly on the threshold, so no surcharge — the band applies to amounts that exceed it. 12.5 × 1.04 = 13%.
  2. 2.Withholding: ₹50,00,000 × 13% = ₹6,50,000.
  3. 3.Liability: there is no gain, so there is no tax on this transaction at all.
  4. 4.Everything withheld is refundable.
Result

₹6,50,000 withheld on a sale that produced a loss. Nothing in the withholding mechanism notices that you lost money — it is computed on the price, and the price is unaffected by what you paid. This is the strongest possible case for a nil-deduction certificate, and the case where people most often fail to apply because it does not occur to them that tax could be withheld on a loss.

Example 3: A short holding period — the same trap, larger

Sale price
₹1,00,00,000
Cost
₹90,00,000
Held
12 months
Gain
₹10,00,000
  1. 1.Held 24 months or less, so short-term. The buyer withholds at the top slab of 30%, because they cannot know yours.
  2. 2.Withholding: the consideration is exactly ₹1 crore, which is within the ₹50 lakh to ₹1 crore band, so surcharge is 10%. 30 × 1.10 × 1.04 = 34.32%. On ₹1,00,00,000 that is ₹34,32,000.
  3. 3.Liability at the top slab: the gain is ₹10,00,000, no surcharge, 30 × 1.04 = 31.2%, so ₹3,12,000.
  4. 4.The difference is ₹31,20,000 — and that is computed on the assumption that you are in the top slab. If you are not, your real liability is lower and the gap is wider still.
Result

₹31,20,000 locked up against a gain of ₹10,00,000 — more than three times the entire profit on the transaction. A short-term sale without a certificate is the most expensive version of this problem there is.

More questions about this page

Why is TDS deducted on the whole sale price and not on my profit?▼
Because the provision requires a buyer paying a non-resident to deduct against the sum being paid, and the sum being paid is the sale consideration. The buyer has no way to verify what the property cost you, so the law does not ask them to compute your gain. The consequence is over-withholding on every sale that has not appreciated dramatically, and the certificate for lower deduction is the mechanism the law provides to correct it in advance.
What is the TDS rate when an NRI sells property in India?▼
On a long-term sale — held more than 24 months — the base rate is 12.5%, with surcharge of 10% above ₹50 lakh and 15% above ₹1 crore, plus 4% cess. That gives effective rates of 13.00%, 14.30% and 14.95% of the whole sale price. On a short-term sale the buyer withholds at 30% plus surcharge and cess, which is 31.20% to 35.88%. The surcharge band is applied to the amount the buyer is paying, because they do not know your income.
Can an NRI use indexation on a property sale?▼
No. For transfers on or after 23 July 2024, the rate is 12.5% without indexation. The option to compute instead at 20% with indexation, for property acquired before that date, was extended by the Finance Act 2024 only to resident individuals and Hindu undivided families — the word 'resident' excludes non-residents. Any page applying 20% with indexation to an NRI seller is using a rule that does not apply to them, and several pages updated in 2026 still do.
How do I reduce the TDS on my property sale?▼
By applying to the Assessing Officer for a certificate authorising deduction at a lower rate or at nil, so the buyer deducts against your expected liability rather than against the sale price. Apply as soon as the agreement to sell is signed. Processing commonly takes a month to three, and the certificate has no retrospective effect — once the buyer has deducted and deposited, the only route left is a refund.
Can I use Form 15G or Form 15H to avoid TDS?▼
No. Those are declarations available to residents, and they do not apply to a non-resident at all. The only mechanism available to you is the certificate for lower or nil deduction, applied for and issued before the payment is made.
What if the buyer has already deducted the tax?▼
Then it is a refund rather than a correction. File a return for the year of sale declaring the gain and claiming credit for the tax withheld, and the refund follows processing — realistically the following assessment year at the earliest. Before filing, check that the withholding actually appears in your tax credit statement: it appears only once the buyer has both deposited the money and filed the statement against your PAN, and first-time individual buyers frequently get one or both wrong.
Does the buyer need a TAN to buy property from an NRI?▼
Yes, and this catches a great many transactions. Withholding on a payment to a non-resident is not the same mechanism as the one used when buying from a resident, and it requires the buyer to hold a tax deduction account number. Individual buyers routinely do not have one and do not know they need one, and obtaining it takes time that the sale timetable has usually not allowed for.
What if I sold the property at a loss?▼
Tax is still withheld, because the withholding is computed on the price and the price does not know what you paid. There is no liability, so the entire amount withheld is refundable — which makes this the strongest possible case for applying for a nil-deduction certificate before the sale. It is also the case people most often miss, because it does not occur to them that tax can be withheld on a transaction that lost money.
Is this calculator my final tax liability?▼
No, and it is not intended to be. It models the withholding gap, which is a narrow and answerable question. It ignores exemptions for reinvestment, cost of improvement, transfer expenses, your other income, capital losses available for set-off, treaty relief and joint ownership — every one of which can move your real liability. None of them changes what the buyer must withhold, which is the number this page is here to show you.
Which provision governs this — section 195 or section 393?▼
The year of the transaction decides. For a transfer in tax year 2025-26 or earlier it is section 195 of the Income-tax Act, 1961, and the certificate is under section 197 in Form 13. From tax year 2026-27 it is section 393(2) of the Income-tax Act, 2025, and the certificate is under section 395 in Form 128. The mechanism is the same under both; only the numbering changed.

Official sources checked

The statutes, rules and regulator pages the statements on this page were checked against.

  • Income-tax Act, 2025 — s. 393(2) (withholding on payments to non-residents), s. 395 (certificate for lower or nil deduction)
    The successors to ss. 195 and 197 of the 1961 Act, applying from tax year 2026-27. Form 13 becomes Form 128.
  • Finance (No. 2) Act, 2024 — long-term capital gain on immovable property at 12.5% without indexation for transfers on or after 23 July 2024
    The option to compute at 20% with indexation instead, for property acquired before that date, was extended by amendment only to resident individuals and HUFs. Non-residents are outside it.
  • Surcharge on long-term capital gain, capped at 15%; health and education cess at 4%
    Applied throughout this tool. Thresholds of ₹50 lakh and ₹1 crore bite on amounts that exceed them, so a figure landing exactly on a threshold stays in the lower band.
  • Arithmetic verified by an automated test in the repository
    scripts/test-nri-property-tds.mts — seven scenarios including a sale at a loss, a short-term sale, a ₹10 crore sale and both band edges, plus six invalid-input cases. Every expectation was computed by hand before being checked against the code.

You are here

Working out how much of your sale price will be withheld, and for how long

What to do next

  1. 1

    If the gap is large, the certificate is the whole answer

    It is the only way to stop the over-withholding at source. Afterwards there is only a refund, and the refund is slower.

    Lower TDS certificate →
  2. 2

    If you are ready to apply

    What goes in the application, how long it takes, and what rejection looks like.

    Form 128 →
  3. 3

    If the tax was withheld but is not showing against your PAN

    That stops the refund entirely, and three of the four causes can only be fixed by the buyer.

    Form 26AS mismatch →
  4. 4

    If money now has to leave India

    A remittance abroad has its own two forms, and whether you need a Chartered Accountant's certificate turns on a threshold.

    Form 15CA, now Form 145 →
  5. 5

    If something has already arrived in the post

    Eight notice types, matched by what the letter says rather than by the section number on it.

    Which income tax notice is this? →

This page is general information about procedure and deadlines, checked against the provisions in force on the date shown. It is not advice on your own assessment, and a notice that looks routine can turn on facts a page cannot see. Where money or a limitation period is at stake, put the notice in front of a practising Chartered Accountant.

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