Found a great resale flat, only to learn the seller lives abroad? That one detail changes your TDS obligation significantly. Buying from an NRI isn't just a paperwork variation — the rate, the base amount, and the form are all different from a regular resident-to-resident resale.
Why this matters more than usual: If you deduct too little TDS on an NRI seller transaction, the Income Tax Department can treat you, the buyer, as being "in default" — meaning you may personally owe the shortfall, plus interest and penalties. This is one documentation area where getting professional tax advice before you pay is genuinely worth the cost.
The Core Difference: No ₹50 Lakh Threshold
When buying from a resident seller, TDS only applies if the property is worth ₹50 lakh or more (covered in our resale buying checklist). With an NRI seller, that threshold doesn't exist. TDS applies from the very first rupee, regardless of property value.
TDS Rates: Long-Term vs Short-Term
| Holding Period | Gain Type | TDS Rate |
|---|---|---|
| More than 24 months | Long-Term Capital Gain (LTCG) | 12.5% + surcharge + 4% cess |
| 24 months or less | Short-Term Capital Gain (STCG) | Slab rate, often deducted at 30% + surcharge + cess |
| Any | Seller has no valid PAN | Flat 20% |
TDS Is on the Full Sale Price, Not the Profit
This surprises most first-time buyers. For a resident seller, TDS is a simple 1% of the sale price. For an NRI seller, the rate (12.5% or more) is technically meant to approximate tax on the seller's capital gain — but unless the seller provides a certificate proving their actual cost of purchase, the buyer has no way to verify it, and must deduct TDS on the entire sale consideration.
In practice, this means a ₹1 crore flat sold by an NRI seller could require a TDS deduction of ₹12-13 lakh or more — a substantial amount that is withheld from the seller and deposited with the government, not paid to them directly.
The Lower/Nil Deduction Certificate
An NRI seller can apply to the Income Tax Department (via Form 13, under what was Section 197) for a lower or nil deduction certificate. If granted, it allows the buyer to deduct TDS at a reduced rate that more closely matches the seller's actual tax liability, rather than the full statutory rate on the entire sale price. Ask the seller upfront whether they have obtained one — it significantly changes the numbers for both parties.
Which Form Applies
NRI seller transactions use Form 27Q, not Form 26QB (or its renamed version, Form 141) used for resident sellers. Forms and section numbers in this area are actively being renumbered under the new Income Tax Act, 2025 — some recent sources reference updated form numbers for NRI-specific filings. Because this is still settling, confirm the exact current form with a tax professional or the Income Tax e-filing portal at the time of your transaction, rather than relying on a specific number from any single source, including this one.
Do You Need a TAN?
Until September 30, 2026, a buyer purchasing from an NRI seller generally needs a TAN (Tax Deduction Account Number) to deduct and deposit this TDS — unlike a resident-seller purchase, which never required one. From October 1, 2026, this requirement is being simplified so a TAN is no longer needed for this case either.
Step-by-Step Checklist
Frequently Asked Questions
You remain responsible for correct TDS deduction. Always confirm residential status in writing before making any payment, not after.
Each seller's share is typically treated under their own applicable rule — the NRI co-owner's portion follows NRI TDS rules, and the resident co-owner's portion follows resident rules. Get this confirmed by a tax professional for your specific case.
Yes — the NRI seller can file an Indian income tax return and claim a refund of any TDS deducted in excess of their actual tax liability. This is a separate process the seller manages after the sale.
For NRI seller transactions specifically, yes — strongly recommended. The stakes (personal liability for underdeduction) and the complexity (holding period, certificates, evolving form numbers) make this one area where professional guidance pays for itself.
Buying from an NRI seller and want it handled correctly?
APKACOMPLEX coordinates documentation and TDS compliance for resale transactions, including NRI seller cases, across Bangalore.
View Pricing & Get StartedRules last verified: October 2026. NRI seller TDS is governed by provisions corresponding to the former Section 195 of the Income Tax Act, now renumbered under the Income Tax Act, 2025. Rates, thresholds, form numbers, and TAN requirements for NRI-seller transactions are actively evolving — always confirm current requirements with a chartered accountant or the official Income Tax e-filing portal (incometax.gov.in) before your transaction.