What applies now, and what changes on 1 October
The 1% resident-seller route is Section 194-IA, now Section 393(1). It is not the route for an NRI seller. Your payment falls under Section 393(2), formerly Section 195.
| Timing and buyer | TAN | Return and certificate | Default deduction |
|---|---|---|---|
| To 30 September 2026 | Yes | Form 144, formerly Form 27Q; Form 131, formerly Form 16A | Rate in force on sale consideration |
| From 1 October 2026, resident individual or HUF buyer | No, report by PAN | Form 141, Schedule E, within 30 days of the month-end (notified 22 September 2026); Form 132 to the seller | Rate in force on sale consideration |
| Any buyer other than a resident individual or HUF after 1 October, such as a company, firm or NRI | Yes | Form 144 and Form 131 | Rate in force on sale consideration |
The form and TAN change is explained in detail on the 2026 change page. It does not turn an NRI sale into the 1% resident-seller route.
The five things you do, in order
First, obtain evidence that the seller is non-resident and get their PAN. Second, agree the deduction before the first payment, including an advance. Third, hold the tax back at the rate in force on the sale consideration unless you already hold a valid lower-deduction certificate.
Fourth, on the TAN route, deposit the tax by the 7th of the following month (30 April for tax deducted in March). Fifth, file the quarterly Form 144, formerly Form 27Q, and give the seller Form 131, formerly Form 16A. A resident individual or HUF paying from 1 October 2026 needs no TAN: tax and statement go together on Form 141, Schedule E, within 30 days of the month-end. Keep the deed, payment trail, challans and certificate together. The tax is one part of the job; the buyer's full due-diligence checklist covers title, power of attorney and heirs.
The seller's lower-deduction certificate
For a long-term sale on or after 23 July 2024, the seller's capital-gains base rate is 12.5% without indexation, plus surcharge and 4% cess. The buyer deducts on the sale consideration, not on a gain the buyer has calculated.
The seller can instead obtain a certificate under Section 395, formerly Section 197, on Form 128, formerly Form 13. It tells you the lower rate or amount to deduct. Hold the certificate before the deed and before releasing the relevant payment. A seller's calculation, email or promise that the certificate is coming does not replace it.
Where your payment goes
You pay the seller in rupees in India, after deducting the applicable tax. Their bank may credit the net proceeds to an NRO account, or to an NRE account where the money has the required repatriable character.
Your job is not to send sale money abroad. Record the seller's Indian account details, the gross consideration, tax withheld and net payment in the deal file. The seller and their bank deal with any later account or remittance question.
A worked example: Meera in Pune
Meera, a resident buyer in Pune, buys an NRI seller's long-term-held flat for Rs 1.80 crore. Without a certificate she deducts at the rate in force on the whole consideration: 12.5% plus the 15% surcharge that applies above Rs 1 crore, plus 4% cess, which is 14.95%, or Rs 26,91,000. She pays the seller Rs 1,53,09,000, deposits the Rs 26,91,000, then files the applicable return.
The seller instead obtains Form 128, formerly Form 13, specifying 5% on the consideration. Meera then deducts Rs 9 lakh and pays Rs 1.71 crore. If completion is before 1 October 2026, she uses her TAN and Form 144. If it is after that date and Meera buys as a resident individual, she uses the PAN-based relief. The certificate changes the deduction, not the deal price.
If you get it wrong
A buyer who fails to deduct can be treated as an assessee in default under Section 201. Interest under Section 201(1A) is 1% a month for failure to deduct and 1.5% a month for failure to deposit after deduction.
The problem usually starts with a buyer using the 1% resident-seller process or releasing money before holding the lower-deduction certificate. Correct it while the deal records, seller contact details and bank trail are still available. The buyer, not the seller, is the deductor the Department will examine.