NRI property sale document checklist

What it involves and when it is due

When a non-resident sells property in India, the buyer deducts tax under Section 195 (Section 393 of the Income-tax Act, 2025 for payments from 1 April 2026), not the 1% under Section 194-IA that applies to resident sellers, and there is no minimum amount. Unless a lower deduction certificate is obtained, the buyer deducts on the whole sale price. For property held more than 24 months the long-term rate is 12.5% without indexation for transfers from 23 July 2024, plus surcharge and cess; short-term gains are taxed at slab rates.

To limit TDS to the tax actually payable, the seller applies on TRACES for a lower or nil deduction certificate in Form 13 (Form 128 for Tax Year 2026-27), with a computation of the capital gain and any exemption claimed, well before the registry. The buyer needs a TAN, files the quarterly TDS statement (Form 27Q, Form 144 from April 2026) and issues the TDS certificate (Form 16A, Form 131).

The gain can be reduced by investing in another house (Section 54), in specified bonds within six months, up to ₹50 lakh (Section 54EC), or by depositing the amount in the Capital Gains Account Scheme before the return due date. The seller files a return (usually ITR-2) to report the sale and claim any excess TDS. Sale proceeds go to the NRO account; up to USD 1 million a financial year can then be remitted abroad after tax, with Form 15CA and, where required, the CA certificate in Form 15CB (RBI Master Direction on Remittance of Assets).

Official forms

Common reasons for queries and rejections

• Buyer deducting 1% under Section 194-IA as if the seller were resident, which leaves the buyer liable for the shortfall and interest.
• Lower deduction certificate applied for too late, so tax is deducted on the full sale price and recovered only as a refund after the return.
• Buyer without a TAN, or not filing the TDS statement, so the TDS does not appear in the seller's Form 26AS.
• No proof of the cost of purchase or improvement (for property bought before 1 April 2001, no valuation of the fair market value on that date).
• Section 54EC bonds bought after six months from the sale, or the Capital Gains Account Scheme deposit made after the return due date.
• Sale money credited to an NRE account instead of the NRO account.

Questions

How much TDS will the buyer deduct?

Without a certificate, tax at the capital gains rate plus surcharge and cess on the whole sale price: for long-term property, 12.5% plus surcharge and 4% cess. A lower deduction certificate limits it to the tax estimated on the actual gain.

Can the whole sale amount be taken abroad?

Up to USD 1 million a financial year from the NRO account, after tax, under the RBI Master Direction on Remittance of Assets. Where the property was bought with foreign exchange, the amount paid in foreign exchange can be repatriated for up to two residential properties. Larger amounts need RBI approval.

Does a non-resident have to file a return after the sale?

Yes, where the gain is taxable, and in any case to claim a refund of TDS deducted in excess of the tax payable.

Official sources

• Form 13 lower deduction certificate FAQ (TRACES)
• Form 15CA user manual (incometax.gov.in)
• Form 15CB user manual (incometax.gov.in)
• Master Direction: Remittance of Assets (rbi.org.in)