NRI Property Sale: TDS 20–30% by Buyer (Section 393, old 195)

When an NRI sells property in India, the buyer must deduct TDS at 20% (LTCG rate) or 30% (STCG rate) on the ENTIRE sale consideration, not just the gain. This is the most commonly mishandled NRI transaction. A ₹1Cr property sale → buyer must deduct ₹20L in TDS. NRI then claims refund after filing ITR.

The TDS problem: Section 393, Income-tax Act 2025 (old Sec 195) requires TDS on the ENTIRE consideration (not just gain). ₹1Cr property → buyer must deduct 20% = ₹20L TDS from payment to NRI seller. NRI receives ₹80L. NRI then files ITR, computes actual LTCG (say ₹30L), tax on LTCG ₹3.75L (12.5%), claims refund of ₹20L − ₹3.75L = ₹16.25L. Refund takes 6-12 months. Lower TDS certificate, the solution: NRI seller applies to Assessing Officer (under Sec 393 (old Sec 195(2)) or Sec 248) for a certificate allowing lower TDS. Certificate specifies TDS only on the actual capital gains portion, not full consideration. This dramatically reduces upfront TDS. Process takes 30-60 days. NRI seller should apply well before property transaction. DTAA benefit: Many DTAA (India-USA, India-UK, India-UAE etc.) allow lower TDS rates or provide that capital gains from immovable property are taxed only in the country where property is situated (India).