Question 1

What is the TDS rate on sale of property by an NRI in India?

Accepted Answer

Under Section 195, TDS on the sale of immovable property by an NRI is deducted at 20% plus applicable surcharge and 4% cess (effective rate 20.8% to 23.92%) on the GROSS sale consideration, NOT on the capital gain.

Question 2

How can an NRI avoid heavy TDS deduction on property sale?

Accepted Answer

An NRI seller can apply for a Lower Deduction Certificate in Form 13 under Section 197 from their Jurisdictional Assessing Officer. Once approved, the buyer will only deduct TDS on the actual capital gain (often reducing TDS from 23% to 3-5% or nil).

Question 3

Can the buyer deduct 1% TDS under Section 194-IA when buying from an NRI?

Accepted Answer

No. Section 194-IA (1% TDS) applies strictly when the seller is a Resident Indian. When purchasing property from an NRI, Section 195 is mandatory, and the buyer faces penalties and prosecution under Section 201/276B if they only deduct 1%.

Question 4

When should an NRI apply for Form 13?

Accepted Answer

The NRI seller should apply for Form 13 on the TRACES portal as soon as the Agreement to Sell is executed, at least 30 to 45 days prior to executing the final sale deed registration.

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