Guide & Calculator · TND Listings
TDS on Property Sale in India
When a property changes hands in India, the buyer — not the seller — is legally responsible for deducting tax at source and depositing it with the government. How much gets deducted depends almost entirely on one thing: whether the seller is a resident or an NRI.
Resident seller
1% of sale value
Section 393(1) — formerly 194-IA
- Applies only at ₹50 lakh or more
- On the higher of sale price or stamp duty value
- No TAN needed — buyer uses PAN
- Form 141 (was 26QB); certificate on Form 132
- 20% if the seller gives no valid PAN
NRI seller
12.5%+ of sale value
Section 393(2) — formerly 195
- No threshold — applies even to a ₹25 lakh flat
- 12.5% on long-term gains, plus surcharge and 4% cess
- Short-term gains taxed at the seller's slab rate
- Deducted on the entire sale price, not the profit
- Quarterly return on Form 144 (was 27Q)
Why NRI sellers lose so much at closing
This is the part that catches most overseas owners off guard. By default, TDS under Section 393(2) is calculated on the full sale consideration — not on the gain you actually made. Sell a flat for ₹2 crore that you bought for ₹1.6 crore, and tax is withheld against the ₹2 crore, not the ₹40 lakh you profited.
On a ₹1 crore long-term sale with no surcharge applicable, that works out to:
Sale consideration₹1,00,00,000
Base tax @ 12.5% (LTCG, no indexation)₹12,50,000
Health & education cess @ 4%₹50,000
TDS withheld at closing₹13,00,000
Add surcharge on higher-value transactions and the effective withholding commonly lands between 13% and roughly 15% of the sale price. You can reclaim the excess — but only by filing a return in India and waiting out the refund cycle, which typically runs several months past the end of the financial year.
The fix: a Lower or Nil Deduction Certificate
Apply to the Assessing Officer under Section 395 (formerly Section 197) before the sale completes. Once issued, the buyer deducts against your computed capital gain rather than the full sale value — which on the example above could cut the withholding from ₹13 lakh to a fraction of it. Applications take time to process, so start well ahead of your closing date, not after.
Long-term or short-term?
- Held more than 24 months — long-term. Taxed at 12.5% without indexation.
- Held 24 months or less — short-term. Added to total income and taxed at slab rates, so TDS can run to 30% plus surcharge and cess.
The indexation benefit was withdrawn for most property sales in Budget 2024. Older guides quoting 20% with indexation are describing rules that no longer apply.
What the buyer must actually do
- Confirm the seller's residential status in writing. Assuming a seller is resident and deducting 1% when Section 393(2) applied leaves the shortfall recoverable from you, with interest and penalty.
- Deduct at every payment — including the booking advance and each instalment, not once at registration.
- Deposit on time and issue the seller their TDS certificate so they can claim credit.
- Check whether you need a TAN. Buying from an NRI required one until 30 September 2026. From 1 October 2026, individual and HUF buyers can deposit against their PAN instead; companies and firms still need a TAN.
Which law governs your transaction
It turns on the earlier of payment or credit. On or before 31 March 2026, the Income-tax Act, 1961 applies — Sections 194-IA and 195, Form 26QB. On or after 1 April 2026, the Income-tax Act, 2025 applies — Section 393 and Form 141. The substance is largely unchanged; the section and form numbers are not.
Letting the property instead of selling it?
TDS on rent works on an entirely different footing — 10% under Section 194-I for resident owners, 31.2% under Section 195 for NRI owners. Our calculator builds a quarter-by-quarter deduction schedule with deposit due dates, and exports to PDF or Excel.
Open the TDS on Rent Calculator →
Provided for general guidance only and does not constitute tax or legal advice. Rates, thresholds and procedures change, and your liability depends on your own facts — holding period, cost of acquisition, available exemptions under Sections 54, 54EC and 54F, and any applicable tax treaty. Please confirm the current position with a qualified chartered accountant before you transact. TND Listings can introduce you to advisors who handle NRI property transactions in Mumbai.
