What the buyer takes, and why it's so much
When a resident sells, the buyer deducts 1% (Section 194-IA). When an NRI sells, that rule doesn't apply. Section 195 takes over, and the buyer withholds on your full sale value, not on your gain.
The rate rises with the sale price:
| Sale price | TDS at closing |
|---|---|
| Up to ₹50 lakh | 13.0% |
| ₹50 lakh to ₹1 crore | 14.30% |
| Above ₹1 crore | 14.95% |
That's the 12.5% long-term rate plus surcharge and 4% cess (surcharge on capital gains is capped at 15%).
Here's the catch. On a ₹2 crore flat with a ₹40 lakh gain, the buyer still cuts about 14.95% of the whole ₹2 crore, roughly ₹30 lakh, even though your real tax is closer to ₹5 lakh. The rest is your money, locked with the tax department until you claim it back, unless you head it off before the sale with Form 13.
NRIs pay a flat 12.5%, with no indexation
Since 23 July 2024, property gains are taxed at a flat 12.5% with no indexation. Before that it was 20% with indexation.
Residents kept a choice: stay on 20%-with-indexation for land or a building bought before that date, if it works out lower. NRIs don't get that choice. You pay 12.5% flat, whatever the purchase date.
On an old, highly appreciated property the flat rate can actually work in your favour; on others it doesn't. A CA runs it both ways to see where you land.
Two things shrink the gain: • Inherited property: your cost is the previous owner's cost, and their years of holding count (Section 49(1)), so the sale is almost always long-term. • Bought before 2001: you can use the property's fair market value as on 1 April 2001 instead of the old price (Section 55(2)(b)). On old property that's usually the single biggest saver.
Form 13 cuts the TDS to your real gain
Section 395, formerly Section 197 lets you ask the tax officer, before the sale, for a certificate that tells the buyer to deduct on your actual gain instead of the full price. You apply on Form 13 (becoming Form 128 from April 2026, when the section moves from 197 to 395).
Done in time, it turns tens of lakhs of withholding into a fraction of that, and the difference stays in your hands at closing instead of coming back a year later. The example up top shows the gap on a ₹2 crore sale.
Watch out
file Form 13 before you sign the sale agreement. Once the buyer is committed to pay, you're on the back foot, and the officer can ask why you waited. The certificate itself takes 30 to 45 days, so start 60 to 90 days before closing.
Cut the tax with reinvestment
If you put the gain back into the right place in time, the tax can drop to zero.
| Section | Reinvest into | Limit |
|---|---|---|
| 54 | Another residential house (the gain) | ₹10 crore |
| 54F | One residential house (the full sale value) | ₹10 crore |
| 54EC | REC / NHAI / IRFC / PFC bonds (the gain) | ₹50 lakh |
You get 2 years to buy or 3 to build; the 54EC bonds must be bought within 6 months and locked for 5 years. Section 54F also needs you to not already own more than one other house.
You can combine them, say ₹50 lakh into 54EC bonds plus a house under Section 54, to wipe out the tax entirely. A Form 13 filed with that plan gets you a near-zero TDS certificate at closing. NRIs can buy the bonds; the new house, though, has to be in India.
Getting the money out
After the sale and the TDS, the net proceeds land in your NRO account. From there you can send up to USD 1 million per financial year abroad, once the taxes are paid and the paperwork is done.
Inherited-property proceeds can go above that USD 1 million cap, sometimes with specific RBI approval. And the cap is per year, not lifetime, so a larger amount can be spread across two financial years (timing the closing near the year-end reaches the next year's allowance sooner). Each transfer needs Form 15CA and a CA's Form 15CB (becoming Forms 145 and 146).
The tax office already knows about the sale
Any property sale above ₹30 lakh is reported to the tax department automatically by the sub-registrar (Section 285BA). By the time you file, the sale is already sitting in your AIS. So don't under-declare it. And if you haven't filed Indian returns in a while, sort that out before you sell, because the sale can set off questions about past years.
A clean exit, in order: • 90 days out: file Form 13 with your reinvestment plan. • 60 days out: certificate in hand, give it to the buyer. • At closing: the buyer deducts at the certified rate and files Form 27Q, not the resident Form 26QB. • Within 6 months: complete the reinvestment. • After: file Form 15CA and 15CB, repatriate, then file your ITR-2 and reclaim any excess TDS.
One mandate, sale to repatriation: what it covers
Most sellers meet four separate jobs spread over six months and three professionals. Under one mandate they run as one sequence with one person accountable, and each stage can also be taken on its own.
| Stage | What is done | When |
|---|---|---|
| Before the sale | Residence, ownership and cost confirmed; the gain computed; the lower-deduction certificate (Form 128, formerly Form 13) applied for | 60 to 90 days before the deed |
| At the sale | The buyer's withholding fixed at the certified figure; the challan and the buyer's Form 144 and Form 131 (formerly 27Q and 16A) kept as evidence | Before each payment |
| After the sale | The return for the sale year, the TDS credit claimed, any refund followed to your account | The following filing season |
| Repatriation | Forms 145 and 146 (formerly 15CA and 15CB), the bank's remittance checklist, the USD 1 million route where it applies | Once the tax evidence is in hand |
Outside the mandate: the sale deed and title work, brokerage, your return in the country you live in, and any promise about what the assessing officer or the bank will accept. The fee is fixed and quoted once the papers are seen; it is never a percentage of the sale or of a refund.