TL;DR — the single table every NRI seller needs
This is the at-source picture across the most common NRI investment exits. "At-source TDS" is what the bank, AMC, broker, or issuer withholds when you redeem; the "treaty floor" is the post-DTAA rate after you furnish PAN + TRC + Form 10F / Form 41; the actual liability is what your ITR computes once exemptions and Form 13 lower-deduction certificates are processed.
Listed equity (direct shares): STCG (≤12 months) — Section 111A, 20% (post-Finance (No 2) Act 2024, effective 23 July 2024) + cess + surcharge. LTCG (>12 months) — Section 112A, 12.5% on gains above ₹1.25L annual exemption + cess + surcharge. DTAA: most Indian treaties grant source-state taxing rights for shares (treaty does NOT typically reduce). Repatriation: PIS account + Form 15CA / 15CB.
Equity-oriented mutual funds: Same rates as listed equity (Sections 111A / 112A). AMC withholds at-source on redemption. DTAA + treaty rate not normally beneficial for capital gains. Use Form 13 if AMC over-withholds.
Debt mutual funds: Post-FA 2023 — slab rate on capital gain regardless of holding period for funds acquired on or after 1 April 2023 (debt MFs lost LTCG benefit). For pre-1-April-2023 acquisitions held over 24 months: 12.5% LTCG post-FA 2024 (no indexation). AMC TDS 20%-30% + cess at source.
Sovereign Gold Bonds (SGB): Capital gains on redemption to the original subscriber — EXEMPT under Section 47(viic). 2.5% p.a. interest taxable as Income from Other Sources (RBI does not deduct TDS on interest; declare in ITR). Secondary-market sale on stock exchange = capital gain (taxable, not covered by Section 47(viic)).
Listed bonds (govt G-Sec / tax-free bonds): Interest from tax-free bonds (Sec 10(15)(iv)) exempt for all holders. Govt bonds and corporate bonds — interest taxable; TDS varies by issuer. Capital gain on sale = 12.5% LTCG (>12 months) post-FA 2024.
NCDs (non-convertible debentures): Interest taxable, TDS at 10% Section 193 (resident) or 30% Section 195 (NRI). Capital gain treatment same as listed bonds.
EPF withdrawal: ≥5 years continuous service — tax-free withdrawal. <5 years — fully taxable as Salary, Section 192A 10% TDS (or 20% if PAN not furnished, per Finance Act 2023 amendment, effective 1 April 2023 onwards — earlier was maximum marginal rate ~34.6%).
NPS exit: 60% lumpsum on retirement — tax-free under Section 10(12A). 40% annuity purchase mandatory; annuity income taxable in receipt year. Premature exit before 60: 20% lumpsum (taxable), 80% mandatory annuity.
REITs / InvITs: Distributions split into components — dividend (taxable, no Sec 10(34) since FA 2020), interest (taxable), capital-return / repayment of debt (post-Finance Act 2023: reduces cost basis up to the issue price; any cumulative excess over issue price is taxable as IOS under Section 56(2)(xii)). TDS at 10% Section 194LBA for resident; Section 195 for NRI.
For any of these, if the at-source rate exceeds your actual tax liability (almost always true for property, frequently true for equity if treaty applies, sometimes true for debt MFs and NCDs), Form 13 / Section 197 lower-deduction certificate is the lever to close the gap at source instead of waiting 6-12 months for ITR refund.
Why NRI redemption tax is structurally messier than resident redemption
Indian residents redeeming the same asset face TDS at relatively benign rates — typically 0% to 10%. NRIs face two additional layers:
Section 195 default. Any payment from an Indian resident (your bank, your AMC, your buyer, the issuer) to a non-resident triggers Section 195 — the catch-all NRI-TDS section. The rate is the rate-in-force prescribed by Schedule I of the Finance Act, which is generally the highest applicable rate. Banks and AMCs often default to a conservative 20%-30%+ because they don't want to under-withhold and become liable for shortfall under Section 201.
TDS on full sale value, not on gain (for property). Section 194-IA (the 1% TDS rule for resident-to-resident property sales above ₹50 lakh) does NOT apply when the seller is an NRI. Instead, Section 195 forces the buyer to withhold 12.5% (post-FA 2024) of the FULL SALE VALUE plus surcharge plus cess — effectively 13-14.95% depending on price band. Cash flow drag at closing can be 25-30% of gross consideration unless Form 13 is in place.
Cess and surcharge confusion. Most DTAAs cap the Indian tax at a headline percentage — say 12.5% for interest under most treaties. Per Section 90(2) and supporting case law, this cap is INCLUSIVE of cess and surcharge — the headline 12.5% is the maximum total Indian bite. Many banks add 4% cess on top of the treaty rate incorrectly; the excess is recoverable via ITR but disputed at source.
Repatriation gating. Even after taxes are paid, the funds sit in your NRO account. To move them out of India, you face the FEMA USD 1 million per FY repatriation cap (with Form 15CA + Form 15CB CA-certified) for any capital balance — including matured FD principal, property sale proceeds, inheritance, gifts. Only current income (interest, dividends) flowing in the same FY is freely repatriable after tax.
Schedule FA + foreign-side reporting. Once redeemed, the proceeds (if you remain Resident in India in the future) appear in Schedule FA disclosure. For US persons — FBAR + Form 8938. For UK residents — Self Assessment SA106 worldwide income. The redemption event itself doesn't trigger the disclosure, but the resulting foreign holding does — and many returning NRIs miss this.
Multiple section TDS interactions. Section 196D applies to FIIs (not most retail NRIs). Section 196A applies to MF income distributions to NRIs (20%). Section 195 covers the residual. Different forms, different challan codes, different reconciliation. AMCs sometimes use the wrong section, generating mismatches in your Form 26AS that need manual reconciliation.
The Form 13 lever — when to use it for each asset class
Form 13 (Section 197 lower-deduction certificate) is the legal lever that closes the gap between at-source TDS and actual liability — BEFORE the deduction happens, not after via refund.
Always worth it: Property sale (gap is typically ₹20-50 lakh on a ₹2 crore flat — see our dedicated Form 13 LDC guide). Direct equity STCG/LTCG above ₹50L where treaty rate or exemption is meaningfully below default. Large NRO FD interest credits where treaty rate is 7.5%-15% vs default 30%.
Usually worth it: Mutual fund redemptions above ₹25L where AMC defaults to 20%-30% but actual computation yields 12.5% or lower after the ₹1.25L Section 112A exemption. NPS exit lumpsums where 60% is genuinely tax-free under Section 10(12A) but withholding is being applied.
Marginal: SGB secondary-market sale (capital gain often modest; LDC cost ~₹15-30K may exceed savings). EPF withdrawal where 5-year rule clearly applies (no TDS to reduce). REIT distributions where the dividend/interest split is small.
Not applicable: SGB redemption to original subscriber (Section 47(viic) makes it tax-free — no TDS to reduce). Tax-free bonds (Section 10(15) makes interest exempt — no TDS).
The Form 13 application takes 30-45 days to process in major NRI tax jurisdictions (Mumbai International Tax, Bangalore, Chennai, Delhi, Pune). Plan to file 60 days before your expected redemption / sale event. See our Form 13 LDC guide for the complete step-by-step including TRACES portal flow and worked examples.
Repatriation rules — getting the money out after redemption
Redeeming the asset is half the journey. Moving the proceeds outside India is the other half, and it's gated by FEMA.
NRE source (foreign-earned funds remitted to India): Fully and freely repatriable. No USD limit, no Form 15CA/15CB above the standard reporting thresholds. The redemption proceeds (including interest / gains) flow back to your home-country account without an annual cap.
NRO source (Indian-earned funds or assets acquired domestically): Capped at USD 1 million per Indian FY (April-March) for capital balances. Current income (current-year interest, dividends) repatriable separately without that cap. Each remittance > ₹5 lakh requires Form 15CA (taxpayer declaration) + Form 15CB (CA-certified determination of taxability) per Rule 37BB.
First two residential property sales: If the property was originally bought from NRE / FCNR funds AND it's one of your first two residential properties being sold, the sale proceeds (after tax) are freely repatriable from NRE without the USD 1M cap. From the third residential property sale onwards — back to NRO USD 1M.
Commercial property: Always USD 1M cap from NRO, regardless of how many you've sold.
Inherited assets: The redemption / sale proceeds go to NRO. Repatriation under the USD 1M cap. The foreign-side jurisdiction may have inheritance / estate tax obligations independently.
Form 15CA / 15CB structure (Rule 37BB):
• Part A — remittance ≤ ₹5L per FY: only Form 15CA, no 15CB. • Part B — remittance > ₹5L, chargeable to tax, AND an AO certificate under Section 195(2)/(3) or Section 197 is in hand: Form 15CA Part B (AO certificate replaces CA certificate). • Part C — remittance > ₹5L, chargeable to tax, no AO certificate: Form 15CA Part C + Form 15CB (CA-certified). • Part D — remittance not chargeable to Indian tax (some capital transfers): Form 15CA Part D, no 15CB.
Most post-tax redemption repatriations use Part C + Form 15CB. CA certification fee typically ₹3K-₹10K per remittance. If you're doing multiple remittances in an FY, the CA can use a single comprehensive certificate covering the year's outbound flow.
Cross-border tax credit — claiming the Indian tax in your home country
After Indian-side tax is paid on the redemption, you typically face home-country tax on the same income. Most DTAAs grant a foreign tax credit (FTC) to prevent double taxation. The mechanism varies by country:
United States: IRS Form 1116 (Foreign Tax Credit) for individuals. The Indian tax paid is creditable against US tax on the same income, up to the US tax liability on that income. Indian capital gains tax of 12.5% credits dollar-for-dollar against US federal tax (which is 0% / 15% / 20% for LTCG depending on income). Use IRS Form 8938 to declare the underlying asset; Form 1116 to claim the credit.
United Kingdom: Self Assessment SA106 (Foreign Income). Foreign Tax Credit Relief (FTCR) for Indian tax paid, limited to UK tax on the same income. Indian capital gains tax credits against UK CGT (10% / 18% / 24% / 28% depending on band).
Canada: T1 General with T2209 Federal Foreign Tax Credit + T2036 Provincial Foreign Tax Credit. Indian tax paid creditable against Canadian federal + provincial tax on the same income.
Australia: Foreign Income Tax Offset (FITO) claimed on individual tax return. Indian tax credits against Australian tax on the same income, up to the Australian tax on that income.
UAE / Oman / Saudi / Bahrain (zero-PIT jurisdictions): No personal income tax in home country — the Indian tax is the entire tax bite. No FTC mechanism needed; net post-Indian-tax amount is your take-home.
Singapore: Generally territorial taxation; foreign-source income may be exempt under specific exemptions, in which case no FTC needed.
The key timing rule: most home-country FTCs require the foreign tax to be paid in the same tax year as the income being credited. India's FY (April-March) doesn't align with US calendar year, UK April-April, etc. — so the income year and tax-paid year may straddle two foreign tax years. Coordinate with your home-country tax preparer to map the Indian FY onto your home-country reporting year correctly.