• Paying full 20% TDS unnecessarily
• Not applying for lower TDS certificate
• Incorrect capital gains calculation
• Missing exemption benefits

Professional tax planning can help reduce tax liability legally.

FAQs – NRI Selling Property in India

1. What is the TDS rate when an NRI sells property in India?

When a Non-Resident Indian sells property in India, the buyer must deduct TDS before making payment.
For long-term capital gains, TDS is generally 20% plus surcharge and cess, which can make the effective rate around 22–23%. For short-term gains, TDS may be deducted based on the applicable income tax slab rates.

2. Can NRIs reduce TDS on property sale in India?

Yes. NRIs can apply for a Lower TDS Certificate under Form 13 from the Income Tax Department.
This allows TDS to be deducted based on the actual capital gains tax liability instead of the full 20% rate, which can significantly reduce the amount deducted.

3. Who is responsible for deducting TDS when an NRI sells property?

The buyer of the property is responsible for deducting TDS before making payment to the NRI seller. The buyer must deposit the TDS with the Income Tax Department and issue a TDS certificate (Form 16A) to the seller.

4. Is capital gains tax applicable when an NRI sells property in India?

Yes, capital gains tax applies when an NRI sells property in India.
If the property is held for more than 2 years, the gain is treated as long-term capital gain and taxed at 20% with indexation. If held for less than 2 years, it is treated as short-term capital gain and taxed according to applicable slab rates.

5. How is capital gains calculated for NRI property sale?

Capital gains are calculated by subtracting the indexed cost of purchase and expenses related to the sale from the sale price of the property.

Basic formula:

Sale Price – Indexed Cost of Acquisition – Improvement Cost – Transfer Expenses = Capital Gain.

6. Can NRIs claim exemption from capital gains tax?

Yes. NRIs may claim exemptions under certain sections of the Income Tax Act such as:

• Section 54 – reinvestment in another residential property
• Section 54EC – investment in capital gains bonds
• Capital Gains Account Scheme (CGAS) – temporary deposit until reinvestment

These options can help reduce or defer tax liability.

7. Do NRIs need to file income tax return after selling property in India?

Yes. Even if TDS has been deducted, NRIs usually need to file an income tax return in India to report the capital gains and claim refunds if excess tax was deducted.

8. What documents are required for applying for a lower TDS certificate?

Typical documents required include:

• PAN card of the NRI seller
• Property purchase agreement
• Proposed sale agreement
• Capital gains calculation
• Cost of acquisition details
• Bank and identity details

A Chartered Accountant usually assists with preparing and submitting the application.

9. What happens if the buyer does not deduct TDS?

If the buyer fails to deduct TDS, the buyer may face interest, penalty, and tax liability under the Income Tax Act. Therefore, proper compliance is important in NRI property transactions.

10. Can CA assistance help reduce tax when an NRI sells property?

Yes. A Chartered Accountant can assist with capital gains calculation, Form 13 lower TDS certificate application, tax planning, and income tax return filing to ensure proper compliance and possible tax savings.