How to Get a Lower TDS Certificate Before Selling Property in India as an NRI

To reduce TDS on an NRI property sale, apply for a lower TDS certificate under Section 197 (now Section 395, via Form 13, now Form 128) on the TRACES portal before the sale closes. This tells the buyer to withhold tax on your actual capital gain instead of on the full sale price, so a much smaller amount gets locked up with the tax department.

If you’re an NRI selling property in India, the number that usually causes the most alarm isn’t the sale price. It’s the TDS. Under Indian law, the buyer is required to withhold tax on the entire sale consideration, not on your actual profit, and not even on whether you made a profit at all. For many sellers, that means lakhs of rupees get tied up with the tax department for a year or more while they wait for a refund after filing a return.

There is a fix, and it has to happen before the sale, not after. It’s called a lower TDS certificate, applied for under what used to be Section 197 (and is now Section 395 under the new Income Tax Act) using what used to be Form 13 (now Form 128). Get this certificate in hand before you sign the sale agreement, and the buyer withholds tax on your real gain instead of your full sale price. This guide walks through why the default deduction is so punishing, who should apply, the documents you’ll need, the exact steps on the TRACES portal, realistic timelines, and the one jurisdiction mistake that causes most of the delays.

Why NRIs Face Such High TDS on a Property Sale

This is the core of the problem, and it’s worth understanding clearly before you do anything else.

When a resident Indian sells property, the buyer withholds a flat 1% TDS under Section 194IA, calculated on the sale value. It’s a light-touch rule designed mainly to track the transaction.

When an NRI sells property, a completely different provision applies: Section 195. Under Section 195, TDS is withheld on the full sale consideration, at rates tied to the capital gains tax bracket, and it applies regardless of whether you actually made a gain or a loss on the property. For long-term capital gains (property held more than 24 months), the applicable rate is currently 12.5% (this rate has applied since the amendment effective July 23, 2024, and comes without the indexation benefit that used to apply), plus applicable surcharge and cess, which typically pushes the effective rate into a rough range of 13% to 15% depending on the seller’s income level. If the property counts as a short-term capital asset, the withholding is calculated at the seller’s slab rate, which can run well above 30%.

There’s also no relief valve here that resident sellers sometimes use. Forms 15G and 15H, the self-declaration forms that let eligible residents avoid TDS altogether, are simply not available to NRIs. For a non-resident seller, the lower TDS certificate is the only route to reducing withholding to match actual tax owed.

A Real Example: How Much Cash Gets Locked Up

Here’s an illustrative example to make the impact concrete. The figures below are simplified for clarity and are not a substitute for an actual computation.

In this example, the seller’s real tax bill is roughly ₹4.2 lakh, but without a lower TDS certificate, the buyer is required to withhold roughly ₹21 lakh on the full sale price. That leaves close to ₹16.8 lakh sitting with the government, recoverable only after the seller files an Indian income tax return for that year and waits for the refund to process, often close to a year later. A lower TDS certificate, obtained before the sale, closes most of that gap upfront.

What the Lower TDS Certificate Is (Form 13, Now Form 128)

A lower TDS certificate is an official authorization from the Income Tax Department that tells the buyer to deduct TDS at a reduced rate that matches the seller’s actual tax liability, instead of the default rate applied to the full sale price.

The application is made to the jurisdictional Assessing Officer under what was, until recently, Section 197 of the Income Tax Act, 1961, using Form 13. Under the Income Tax Act, 2025, this provision has been renumbered as Section 395, and the application form is now Form 128, effective from April 1, 2026. Both the old and new terminology are still in wide use, so this guide references both. Once issued, the certificate legally protects the buyer for deducting at the rate stated on it, so there’s no compliance risk on their side for honoring a lower rate.

A note on the word “lower”: some certificates can be issued at a nil rate in principle, but in practice this outcome is uncertain and depends heavily on the individual Assessing Officer and jurisdiction. Sellers should apply expecting a reduced rate that reflects their real gain, rather than assuming a nil certificate will be granted.

Writer note, verify before publishing: Confirm the current status of the Form 13-to-Form 128 and Section 197-to-Section 395 renumbering, and the practical availability (or discontinuation) of nil-rate certificates for NRIs, against a current official source (the Income Tax Department portal or a CBDT notification) before this goes live. Tax administration details of this kind can shift with rule updates.

Who Should Apply, and When

A lower TDS certificate is worth the effort for almost any NRI seller, but it makes the biggest difference in specific situations:

• The property has been held for a long time, so the cost base is low relative to today’s sale price and the gain, in percentage terms, is smaller than it looks.
• Significant improvement or renovation costs can be added to the cost base, reducing the taxable gain.
• The seller plans to reinvest sale proceeds and claim an exemption under Section 54 or Section 54EC, which lowers the effective tax owed well below the default withholding rate.

The timing matters as much as the eligibility. Start the application process before you sign the agreement to sell, and certainly before accepting any advance payment from the buyer. Applying after the fact doesn’t help, since TDS is calculated and withheld at the time of the actual payment, not retroactively.

One quick note: the same lower or nil deduction certificate mechanism under Section 197/395 also applies to other kinds of NRI income, such as rent and interest, but this guide focuses specifically on property sales.

Documents You Need to Apply

Getting the paperwork together is usually the slowest part of the process for NRIs applying from abroad, since it often means digging up documents from years or decades earlier. Have these ready before you start:

• A capital gains computation showing sale value, cost of acquisition, cost of improvement, and the resulting tax payable
• The agreement to sell, or a draft sale agreement if the final one isn’t signed yet
• The original purchase deed, along with allotment or possession letters and receipts for any improvements made
• The buyer’s TAN (Tax Deduction and Collection Account Number), which is mandatory for the buyer to have as of this writing, along with the buyer’s PAN and Aadhaar details
• Your passport and proof of NRI status, PAN card, recent Income Tax Returns and Form 26AS, NRO bank account details, and a Power of Attorney document if someone else is filing on your behalf

Note that a Budget 2026 change is expected to move NRI property TDS compliance to a PAN-based mechanism that would remove the buyer’s TAN requirement, but this transition has a specific effective date. Confirm the current rule at the time of your transaction, since applying under the wrong compliance regime can cause delays.

Step-by-Step: Applying for the Certificate on TRACES

The entire process happens online through the TRACES portal. There’s no need to be physically present in India to file the application.

Step 1, get the buyer’s TAN sorted first. Before you can file, confirm the buyer has a valid TAN (subject to the compliance regime in effect at the time). Without it, the application can’t be completed, so this is worth confirming early in your discussions with the buyer.

Step 2, build the capital gains computation. Work out the sale value, cost of acquisition and improvement, indexation where applicable, and any exemptions you intend to claim. This computation is the backbone of your application and the main thing the Assessing Officer will scrutinize.

Step 3, file Form 13 (or Form 128) on the TRACES portal. Register or log in, select the relevant form, and upload the computation along with the supporting documents listed above. The application asks for details of the transaction, the buyer, and the projected income for the year.

Step 4, the application routes to the International Taxation Assessing Officer. Applications from NRIs are handled by the AO attached to the International Taxation charge covering your PAN, not by a local resident ward. This distinction matters enormously and is covered in more detail below.

Step 5, respond to AO queries, then receive the certificate. The AO may come back with questions or request additional documentation. Respond promptly, since this is usually the biggest variable in how long the process takes. Once satisfied, the AO issues the certificate specifying the rate at which TDS should be deducted.

Step 6, share the certificate with the buyer. Provide the buyer with a copy before the payment is made, so they can withhold at the certified rate instead of the default rate.

How Long It Takes and the Jurisdiction Trap

Processing times vary considerably depending on the Assessing Officer’s workload and how complete your application is on first submission. As a rough guide, expect somewhere between four and eight weeks in typical cases, though some applicants report faster turnarounds closer to fifteen to forty-five days when the AO’s office is efficient and the documentation is airtight from the start. Treat any timeline you’re given as a range, not a guarantee.

The mistake that costs weeks

The single most common cause of delay is filing the application with the wrong Assessing Officer. NRI applications must go to the AO in the International Taxation charge that covers the NRI seller’s PAN, not to a local resident ward where the property happens to be located. Applications filed with the wrong office often sit unprocessed or get bounced back for refiling, which can eat up weeks you don’t have if a sale is already in motion. Before you file, confirm the correct jurisdiction for your PAN. This is exactly why starting the process early, well before you sign anything with the buyer, is so important.

After You Get the Certificate

Once the certificate is issued and shared with the buyer, the rest of the process follows the normal TDS compliance path:

• The buyer deducts TDS at the certified rate, deposits it with the government, files Form 27Q, and issues you a Form 16A as proof of deduction
• Sale proceeds are received into your NRO (Non-Resident Ordinary) bank account
• If you want to move the money out of India later, repatriation typically requires Form 15CA and, depending on the amount, Form 15CB from a chartered accountant. That’s a separate process worth planning for on its own.

Notes and Disclaimers

The following should run at the end of the published piece.

• This article is general information, not professional advice. It is intended to help NRIs understand the lower TDS certificate process at a high level and does not constitute tax, legal, financial, or investment advice. Every seller’s situation, including residency status, holding period, exemptions claimed, and applicable treaty benefits, is different, and outcomes depend on individual facts.
• Tax law referenced in this article is subject to change. India’s Income Tax Act, 2025, and associated rules were still transitioning into force as of this writing, and specific provisions, form numbers, section numbers, rates, and compliance deadlines (including the TAN-to-PAN transition for buyer compliance) may be updated, amended, or reinterpreted by the tax authorities after publication. Readers should verify the current position directly with the Income Tax Department (incometax.gov.in), the TRACES portal, or a qualified professional before acting.
• No guarantee of outcome. Filing a lower TDS certificate application does not guarantee approval, a particular rate, or a specific processing time. The Assessing Officer has discretion based on the facts and documentation presented, and timelines described here are illustrative estimates, not commitments.
• Numerical examples are illustrative only. The worked example in this article uses simplified, hypothetical figures for explanatory purposes and is not a real transaction, a tax computation template, or a projection of any individual’s likely tax outcome.
• Consult a qualified professional before filing. Because of the complexity, the stakes involved, and the pace of regulatory change, readers should engage a chartered accountant or tax advisor licensed to practice in India, familiar with NRI taxation and current Income Tax Act, 2025 provisions, before submitting a Form 13/128 application or making any decisions about a property sale.
• No liability accepted. [NRI India Guide] is not liable for any loss, penalty, delay, or adverse outcome arising from reliance on this article. This content is provided “as is” without warranties of accuracy, completeness, or fitness for a particular purpose, and is current only as of its publication date.

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