Buying a flat from an NRI seller is operationally different from a Resident transaction. Section 194-IA (1% on consideration above ₹50L) does notapply. Instead, section 195 kicks in — and the effective TDS rate can cross 23%.
Rate snapshot (post-Budget 2024)
- Long-term (>24 months): 12.5% on capital gains + surcharge + 4% cess. Grossed up on sale consideration unless seller obtains Form 13.
- Short-term: taxed at slab rates (max 30%) + surcharge + cess on the gain.
- Surcharge on sale consideration (not gain): 10%/15%/25% depending on bracket.
Buyer's 7-step checklist
- Get a TAN. Section 195 deduction needs TAN, not just PAN. Apply via NSDL — typically 7 working days.
- Confirm seller's residential status. Passport + visa + day count for last 4 years. Sellers occasionally claim "Resident" on the agreement to dodge the higher TDS — that's your liability if wrong.
- Ask the seller to apply for a Lower Deduction Certificate (Form 13). The AO computes actual tax liability and issues a certificate — TDS drops from ~23% on consideration to roughly your actual CG tax on the gain.
- Deduct at registration, deposit by the 7th of the following month. Use Challan ITNS-281.
- File Form 27Q quarterly. NRI TDS is reported separately — not in 26Q.
- Issue Form 16A to the seller within 15 days of the quarter's filing.
- Verify Form 26AS reflection before final possession.
Repatriation by the NRI seller
Sale proceeds go into the seller's NRO account. To repatriate (up to USD 1 million per FY), the seller needs Form 15CA / 15CB from a CA confirming taxes are paid. This is a separate workflow from your TDS — but a smart buyer asks for it before final possession so disputes don't surface six months later.