Section 195 NRI Property Sale TDS vs Lower TDS Certificate Estimator

An estimate, not a determination. The Assessing Officer decides whether a lower or nil deduction certificate is issued and at what rate. Exemptions under sections 54 and 54EC are not modelled, and special cases are not modelled; a CA should confirm. C S Rushil & Co. reviews the computation for your sale before it is filed.

How do I use this NRI property TDS estimator?

The estimator needs only the figures from your sale agreement and your purchase papers. Work through the steps below, and keep the documents at hand so the numbers match what an Assessing Officer would see.

1. Enter the sale price. Use the full sale consideration stated in the agreement for sale, not the amount you expect to receive after deductions.
2. Note who is buying. This does not change the figures, but it goes into the summary you can send us, because the buyer's position affects how the deduction and the paperwork are handled.
3. Enter the purchase date. The tool sets the holding period from it as of today. If the sale will be registered on a different date, check the holding period answer yourself.
4. Enter the cost of acquisition, the cost of improvement and the transfer expenses. Use the purchase price, the cost of any capital additions such as a new floor, and expenses wholly for the sale, such as brokerage and legal charges.
5. Read the three results. Column (a) is the default TDS on the sale price, column (b) is the estimated tax on your gain, and the headline figure is the difference between them.
6. Send the result for review. The WhatsApp button sends a plain summary of your inputs and the result, so a CA can check it before you apply for a certificate.

Why does the buyer deduct TDS on the whole sale price?

When the seller is a non-resident, the buyer must deduct tax at source under section 195 of the Income-tax Act, 1961 before paying the sale price. The section asks for tax on the sum chargeable to tax, which in principle is your capital gain. In practice, however, a buyer cannot verify what you paid for the property, what you spent on improving it or what the sale cost you. A buyer who deducts too little can be treated as in default, so buyers and their advisers withhold on the gross amount unless a certificate from the Assessing Officer tells them to do otherwise.

This is quite different from a sale by a resident, where the buyer deducts a small percentage of the price. For an NRI seller the deduction is calculated at the capital gains rate, applied to the entire sale price. On a large sale with a modest gain, the tax withheld can be several times the tax actually due, and the excess sits with the government until your return is processed and a refund is issued.

How does the estimator calculate default TDS?

For property held for more than 24 months, the gain is long-term. The estimator applies 12.5% to the whole sale consideration. It then adds surcharge on that tax: nil where the sale price is up to ₹50 lakh, 10% where it is above ₹50 lakh and up to ₹1 crore, and 15% where it is above ₹1 crore, which is the cap for long-term capital gains. Finally, it adds Health and Education Cess at 4% of the tax plus surcharge.

For property held for 24 months or less, the gain is short-term and is taxed at the slab rates that apply to the seller. Because the estimator does not know your other income, it assumes the highest slab of 30%, with the same surcharge bands and cess. That is an assumption, clearly labelled in the result, and your actual rate may be lower. The surcharge on larger short-term amounts can also differ from the bands used here, which is another reason to have a CA confirm the figure.

How is the tax on my actual capital gain estimated?

The gain is the sale price less the cost of acquisition, the cost of improvement and the transfer expenses. If the result is nil or negative, the estimated tax is nil. For long-term gains, the estimator applies 12.5% without indexation, which is the rate for transfers on or after 23 July 2024, and then adds surcharge and cess using the same bands, measured against the gain rather than the sale price. For short-term gains it applies the 30% assumption again.

This figure is an estimate of what you would owe on the sale itself. It does not take into account your other Indian income, any losses you can set off, or reinvestment exemptions under sections 54 and 54EC. Some older acquisitions have transitional options that apply to resident individuals and do not apply to non-residents in the same way. Those special cases are not modelled; a CA should confirm them before anything is filed.

What is a lower or nil deduction certificate, and how does it help?

A lower or nil deduction certificate is issued by the Assessing Officer on an application in Form 13 under section 197 of the Income-tax Act, 1961. The application sets out the sale, your cost and expenses, the computed gain and the tax on it. If the officer is satisfied, the certificate names the buyer and the rate at which the buyer should deduct tax, so the buyer withholds an amount close to your actual tax instead of tax on the whole price.

The Income-tax Act, 2025 applies from 1 April 2026, and the certificate is now issued under its corresponding provision; the process of applying with your computation and evidence remains the core of the work. The certificate is the officer's decision, not an automatic right, and the officer may issue it at a rate different from the one you apply for. That is why the result above is described as cash that could stay with you.

Timing matters. The certificate is tied to a specific buyer, so it is generally applied for after the sale agreement is signed and well before the planned registration date. Our NRI property sale TDS service covers the application, the supporting computation and the follow-up with the Assessing Officer.

What does a worked example look like?

Take an NRI who sells a Chennai flat held for six years for ₹1.2 crore, bought for ₹70 lakh, with ₹5 lakh of improvements and ₹1 lakh of transfer expenses. The gain is ₹44 lakh. Default TDS is 12.5% of ₹1.2 crore, which is ₹15 lakh, plus 15% surcharge and 4% cess, about ₹17.94 lakh in total. The estimated tax on the gain is 12.5% of ₹44 lakh, ₹5.5 lakh, with no surcharge at that level of gain, plus cess, about ₹5.72 lakh. The difference, roughly ₹12.22 lakh, is the cash that a certificate could keep with the seller instead of waiting for a refund. Enter your own figures above to see your case.

What else has to be done when an NRI sells property?

TDS is one part of the sale. The buyer deposits the tax and files a TDS return, and you receive a TDS certificate that you claim in your income tax return. Our TDS return filing service can help a buyer who is unfamiliar with deducting tax from a non-resident. After the sale, you report the gain and claim the TDS in your return through our income tax return filing service, which is also how any excess deduction is refunded.

If you plan to move the sale proceeds abroad, the bank will usually ask for Form 15CA and, in many cases, a CA certificate in Form 15CB. Our Form 15CA and 15CB service covers that step. Your residential status for the year also decides how the sale is taxed, so if you have spent time in India recently, check it with our NRI residential status calculator. For the wider picture, including rental income, repatriation and returns, see our NRI tax services.

Is the result of this estimator final?

No. It applies the rates and bands stated on this page to the figures you enter and gives an estimate for guidance. The Assessing Officer decides whether to issue a certificate and at what rate, the tax on your gain depends on facts the tool does not ask about, and exemptions and special cases are not modelled. C S Rushil & Co. advises on Indian law only; tax in the country where you live is for your adviser there. Clients abroad are served online, and you can start with a 15-minute consultation as described in how we work.