Easy TDS Deduction Guide If You Bought Property from an NRI

Under Section 393(2) Table SI. No. 17 (Earlier 195) of the Income-tax Act, 2025, when you have bought the property from a non-resident Indian (NRI), you are required to deduct tax (TDS).

The tax should be deducted while making any payment to an NRI for buying the property. The same would indeed get applied in the case when the advance is furnished. A buyer is mandated to deposit the TDS with the Income Tax Dept.

While buying the property from the NRI, TDS would get deducted from the sale value, and the balance amount must be obligated to be furnished to the NRI seller. On the tax deduction, there is no threshold limit. Towards buying the property from a resident, there shall be no tax deducted when the sale value is less than Rs 50 lakh as per Section 393(1) Table SI. No. 3(i) (Earlier 194IA).

What is the Method of Computing the Capital Gains on the Property Sale?

The property which is owned by the NRI is treated as a capital asset, which could be a long-term capital asset or a short-term capital asset. Long-term capital gains (LTCG) tax shall be imposed when the property is sold after a duration of 24 months from the date it was acquired. When the property is owned for less than 24 months, then the same draw short-term capital gains (STCG) tax.

The applicable TDS rates on the sale of NRI-owned property would be:

• On the property sale, the LTCG tax held for exceeding 24 months: 20%.
• STCG tax upon property sale which is owned for less than 24 months: As per the Income tax slab rates for NRIs.

Along with that, the surcharges and cess should indeed apply to the capital gains.

Facts of TAN Number, TDS Payment and Return

The buyer of the property is obligated to comply with Section 393(2) Table SI. No. 17 (Earlier 195) of the ITA and make additional mandatory reporting compliances as below:

• TAN requirement to pay TDS on purchase of immovable property from non-residents is now not required due to CBDT Notification No. 121/2026 dated 22nd September, 2026, which has introduced a PAN-based payment and reporting mechanism through Form 141 – Schedule E for resident Individuals and Hindu Undivided Families (HUFs) purchasing immovable property from non-residents, effective from 1st October, 2026.
• Resident Individuals and HUFs covered by the PAN-based mechanism are required to furnish Form 141 – Schedule E within 30 days from the end of the month in which TDS is deducted. Where multiple buyers are involved, each buyer is required to furnish a separate Form 141. In case of payment made in instalments, previous payment and acknowledgement details are also required to be reported, wherever applicable.
• Since Form 141 is Challan-cum-Statement of deduction of tax under section 393(1) [Table: SI. Nos. 2(i), 3(i), 6(ii) & 8(vi)] thus no further requirement to furnish return separately.

Nil/Lesser TDS Deductions

NRI sellers could claim the utility of tax deductions at lesser rates to the income tax jurisdictional assessing officer. A resident buyer of the property made the application under section 395 (Earlier 195(2)) of the Income Tax Act for revealing the part of the income applicable for the deduction of tax.

The NRI seller could indeed apply under Form 128 (Earlier 13) to obtain a lower/ Nil TDS under Section 395 (Earlier 197) for such receipts.

A certificate shall be issued by the assessing officer specifying the tax deduction amount, on which the buyer is obligated to deduct TDS on the total sale consideration. For finding out the tax amount deductible, if the buyer or NRI seller does not file any application then the tax is required to be deducted on the complete sale consideration of the property.