NRI selling property in India: TDS, the lower-deduction certificate, Forms 145/146 and repatriation

Rules and rates as of 12 October 2026.

When a resident sells a flat, the buyer deducts 1% and the matter is mostly closed. When the seller is a non-resident Indian, almost everything changes: the deduction is far larger, the buyer has more paperwork, and getting the money out of India runs through a separate set of foreign-exchange rules. This explainer walks through the four pieces in order: the tax the buyer deducts, the certificate that can shrink it, the remittance forms that replaced 15CA and 15CB, and the limits on taking the money abroad.

1. The buyer's deduction: section 393, but not the 1% row

Under the Income-tax Act, 2025, section 393, sub-section (1) deals with payments to residents. Its table (serial 3(i)) sets 1% of the consideration or stamp duty value, whichever is higher, with a ₹50 lakh threshold. That row is for resident sellers only.

A non-resident seller falls under sub-section (2), the table headed "for payments to non-resident". There is no specific property row there. The sale falls in the residual entry, serial 17, which covers "any other sum chargeable under the provisions of this Act", at "rates in force". The obligation, by the Act's own note, applies to every payer, resident or non-resident. There is no ₹50 lakh threshold in that row, so even a small plot sold by an NRI attracts deduction.

The "rate in force" for long-term capital gains follows the charging rate. Section 197 taxes long-term capital gains at 12.5%. Its sub-section (3), which lets a resident individual or HUF compare against 20% with indexation for land or buildings bought before 23 July 2024, is limited to residents. A non-resident seller does not get that comparison.

On top of the base rate come surcharge and cess. Clause 3(7) of the Finance Bill, 2026 (as introduced on 1 February 2026) sets surcharge on tax deducted from a non-resident individual by the amount "paid or likely to be paid and subject to the deduction": 10% above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore and 37% above ₹5 crore. A 4% health and education cess then applies on tax plus surcharge.

2. What the deduction is calculated on

Section 393(2) requires deduction "on the amount of such income or sum". For a property sale the income is the capital gain, not the price. But the buyer cannot see the seller's purchase cost or improvement bills, so without a certificate the buyer has no official basis for deducting on anything less than the full price. That is the gap the certificate fills.

3. The lower-deduction certificate: section 395

Section 395 gives two routes:

• Seller applies (s.395(1)). The payee may apply to the Assessing Officer, who, "on being satisfied that the total income of the payee justifies" it, issues a certificate for a lower rate or nil. The buyer then deducts at the certificate rate while it is valid. The application is Form No. 128 under the Income-tax Rules, 2026 (rule 213), which replaces the old Form 13. The form says it is filed electronically on TRACES, and it covers non-resident applicants.
• Buyer applies (s.395(2)). A payer under serial 17 who believes the whole sum is not chargeable may ask the Assessing Officer to determine "the appropriate proportion of the sum chargeable to tax", and then deducts only on that proportion.

The seller holds the documents the application needs (purchase deed, payment proof, improvement bills), and it is the seller's money that is held back.

Worked example: same sale, two deductions

Illustrative figures only. An NRI sells a flat in India for ₹1,60,00,000. It was bought years ago for ₹1,00,00,000 and has been held long enough to be a long-term capital asset. Ignore transfer expenses and improvement costs to keep the arithmetic visible.

Capital gain = ₹1,60,00,000 − ₹1,00,00,000 = ₹60,00,000 (no indexation for a non-resident).

Case A, no certificate, deduction on the full price. Amount subject to deduction is above ₹1 crore, so surcharge is 15%.
Tax = 12.5% × ₹1,60,00,000 = ₹20,00,000
Surcharge = 15% × ₹20,00,000 = ₹3,00,000
Cess = 4% × (₹20,00,000 + ₹3,00,000) = ₹92,000
Total deducted = ₹23,92,000 (an effective 14.95% of the price).

Case B, certificate allowing deduction on the gain. Assume the Assessing Officer certifies the full ₹60,00,000 gain as chargeable. That amount is above ₹50 lakh but below ₹1 crore, so surcharge is 10%.
Tax = 12.5% × ₹60,00,000 = ₹7,50,000
Surcharge = 10% × ₹7,50,000 = ₹75,000
Cess = 4% × (₹7,50,000 + ₹75,000) = ₹33,000
Total deducted = ₹8,58,000.

Item	Case A: on full price	Case B: with certificate
Base on which tax is deducted	₹1,60,00,000	₹60,00,000
Tax at 12.5%	₹20,00,000	₹7,50,000
Surcharge	₹3,00,000 (15%)	₹75,000 (10%)
Cess at 4%	₹92,000	₹33,000
Total deducted by buyer	₹23,92,000	₹8,58,000
Seller receives at closing	₹1,36,08,000	₹1,51,42,000

The difference is ₹15,34,000. In Case A the tax is not lost: the seller files a return and claims the excess back as a refund. But that money sits with the government until the return is processed, which happens only after the tax year ends and the return is filed. The certificate is about cash flow, not about lowering the final tax. The real liability is fixed by the return, after all deductions and exemptions the seller is entitled to.

4. The remittance forms: 145 and 146 replace 15CA and 15CB

The Income Tax Department's Form 145 FAQs set out the new numbering. Form No. 145 (formerly 15CA), under rule 220 of the 2026 Rules (formerly rule 37BB), is a declaration filed before remitting money to a non-resident or foreign company. It has four parts:

• Part A: chargeable to tax, not more than ₹5 lakh in the tax year.
• Part B: chargeable, above ₹5 lakh, where a section 395 certificate from the Assessing Officer has been obtained.
• Part C: chargeable, above ₹5 lakh, with a chartered accountant's certificate in Form No. 146.
• Part D: not chargeable to tax.

Form 146 is needed only for Part C. The FAQs add that Form 145 cannot be edited after submission but can be withdrawn within seven days, and link non-filing or inaccurate filing to a penalty of up to ₹1 lakh under section 462. Note one inconsistency on the official page itself: one answer refers to a certificate under section 395(1), another to 395(1)/395(2). Many websites still give other form numbers; the numbers above are the ones on the department's own FAQ.

5. Taking the money out: two FEMA routes

Sale proceeds usually land in the seller's NRO account. The RBI's Master Direction on Remittance of Assets (updated 29 June 2026) lets banks allow an NRI or PIO to remit up to USD one million per financial year out of NRO balances, which include sale proceeds of assets, on documentary evidence and an undertaking. It can go in instalments, but all through the same bank. Anything above USD one million in a year needs prior RBI approval. The Direction says banks must comply with tax laws, which is where Form 145 comes in.

A second route applies if the flat was bought with money from abroad. Under paragraph 8.2 of the RBI's Master Direction on acquisition or transfer of immovable property, a bank may allow repatriation of sale proceeds where the property was acquired lawfully and paid for in foreign exchange through banking channels or from NRE or FCNR(B) accounts. Home-loan instalments repaid from abroad or from those accounts count as foreign exchange. For residential property this route is limited to not more than two properties.

What this does not cover

Treaty relief, exemptions such as reinvestment in another house, inherited property cost rules and joint ownership change the numbers. A chartered accountant who handles non-resident sales can say which apply before the certificate application goes in.