1Is TDS different when buying property from an NRI?
Yes — much higher than the 1% for resident sellers. TDS is deducted at the NRI's capital-gains rates (plus surcharge and cess), so confirm the seller's residential status before the deal.
Buying property from an NRI seller carries a very different, and much heavier, TDS obligation than buying from a resident — and getting it wrong exposes the buyer. Here's how TDS on an NRI property sale works. Exact rates are confirmed for the specific case.
Reviewed by CA Harika Chebolu, FCA · Last updated 2026-06-14
Quick answer
Buying from an NRI means deducting TDS on the capital gain at higher rates — not the 1% for resident sellers. Here's how to get it right.
The simple 1% TDS under Section 194IA applies only to resident sellers. When the seller is an NRI, a different provision applies, and TDS is deducted at much higher rates linked to capital-gains tax — so don't assume the 1% rule; confirm the seller's residential status first.
For an NRI seller, TDS is deducted at the rates applicable to their capital gains (plus surcharge and cess), which are far higher than 1% and apply on the sale value unless a lower-deduction certificate reduces it. This can tie up a large sum, so plan for it.
Because TDS on the full sale value can far exceed the actual tax on the gain, the NRI seller can apply for a lower or nil deduction certificate from the tax department, based on the real gain. This is the key planning step to avoid over-deduction and a long refund wait.
The buyer must deduct the correct TDS, deposit it, obtain a TAN (unlike the 194IA route), and file the TDS return. Getting this right protects the buyer — a buyer who under-deducts can be held liable for the shortfall.
Because the amounts and compliance are significant, both buyer and NRI seller should get advice before the sale — to fix the right TDS, pursue a lower-deduction certificate, and handle the paperwork. It's far easier to plan than to fix afterward.
Yes — much higher than the 1% for resident sellers. TDS is deducted at the NRI's capital-gains rates (plus surcharge and cess), so confirm the seller's residential status before the deal.
By applying for a lower or nil deduction certificate from the tax department , based on the actual capital gain — avoiding TDS on the full sale value and a long refund wait.
Deduct the correct (higher) TDS, obtain a TAN, deposit the TDS and file the TDS return. A buyer who under-deducts can be held liable for the shortfall, so get it right.
Buying from or selling as an NRI? Write to the firm and we'll fix the TDS and lower-deduction certificate before you sign.