Property Sale Sequencer

When the seller is a non-resident, the buyer must deduct tax at the rates in force, and in practice on the gross sale consideration unless the seller holds a lower/nil-deduction certificate. For long-term gains (transfer on or after 23 July 2024) the base rate is 12.5 percent without indexation, plus surcharge by slab (nil below fifty lakh rupees of consideration, 10 percent to one crore, capped at 15 percent above) plus 4 percent cess — roughly 13 to 15 percent of the FULL value withheld. Short-term gains withhold at slab rates.

Section 194-IA's 1 percent deduction (Form 26QB) applies only where the transferor is a RESIDENT. Buying from an NRI runs under the non-resident withholding section instead, at the rates above. Using the 1 percent route for an NRI purchase is not a discount — it is the wrong form: the seller's TDS credit strands, and the buyer faces a short-deduction demand for the difference.

The seller can apply for a lower or nil deduction certificate (Form 13 on TRACES — now Form 128 under the 2025 Act) so the buyer withholds on the actual estimated gain instead of the gross value. The certificate is buyer-specific and year-specific: it names the deductor, so it cannot be applied for until the buyer is identified, and it runs from issue to the end of the financial year unless cancelled. The service standard is 30 days; practitioner-reported reality for NRI property cases is three to eight weeks. Work backwards: buyer identified, then Form 13, then — only then — the deed.

The buyer must hold a Tax Deduction Account Number before depositing the withheld tax — an obligation that does not exist in the ordinary resident-to-resident purchase they may have done before. Allotment typically takes days to two weeks; it must exist before the first payment installment, because deduction happens at each credit or payment.

The buyer deposits the withheld tax via challan ITNS 281 by the 7th of the month following the deduction (30 April for March deductions). Several NRI-focused guides wrongly import the resident-purchase rule's 30-days-from-month-end window here — that window belongs to the 1 percent route only. Sequence on the 7th.

The buyer files the non-resident TDS return (Form 27Q — now Form 144 under the 2025 Act) for the quarter of the deduction, due 31 July, 31 October, 31 January and 31 May for the four quarters respectively, and must issue Form 16A to the seller within 15 days of that due date. Form 16A is the seller's proof that the withheld money was actually credited against their PAN — chase it; a buyer who deposited but never filed leaves you with nothing to claim.

Sale proceeds land in your NRO account and may be remitted up to one million US dollars per financial year (net of taxes) with Form 15CA and a CA's Form 15CB. Where the property was bought with foreign-exchange funds, proceeds are repatriable up to the amount originally paid — and for residential property that route is restricted to not more than two such properties. Above the annual limit needs prior RBI approval.

Excess withholding comes back only through the seller's Indian income-tax return after the financial year ends; the buyer cannot self-adjust or refund, and there is no fast lane. The capital-gains exemptions (reinvestment in property, specified bonds within their six-month window, and the proceeds route) are realised either up front through the certificate — the officer factors them into the lower rate — or through this refund route. Skipping the certificate can lock up roughly one seventh of the gross value for nine to eighteen months or more.

The Income-tax Act, 2025 came into force on 1 April 2026, so a sale completing now runs under it — the 1961 section numbers above survive as the vocabulary everyone still uses, which is why this page cites both. If a bank, buyer or portal shows you the new numbers (393(2) for the withholding, 395 and Form 128 for the certificate, Form 144 for the return), it is the same machinery renamed.