Published On: 25 June 2026

When a Non-Resident Indian sells a property in India, the tax treatment is noticeably stricter than it is for a resident seller — and the difference shows up most sharply in the tax deducted at source (TDS). Understanding the tax for nri selling property india early, before signing the sale agreement, can spare you a serious cash-flow squeeze and months of waiting for a refund. This guide explains how TDS works under Section 195, how long-term capital gains are now taxed, the exemptions you can claim, and how a lower-deduction certificate keeps your money from being locked up. If you are an NRI who bought a home at Godrej Brooklyn Avenue in Kukatpally, planning your eventual exit tax is just as important as planning the purchase. All figures and rules below are stated as of 2026 — verify the current position with a tax adviser or on the official income-tax portal before you transact.

TDS on Sale by an NRI: Why It Is Not 1%

Many buyers assume the familiar 1% TDS applies to every property sale. It does not. The 1% rate under Section 194-IA applies only when the seller is a resident and the sale value is Rs 50 lakh or more. When the seller is an NRI, the buyer must instead deduct TDS under Section 195, and the rate is far higher. For a long-term sale — property held for more than 24 months — on a transfer on or after 23 July 2024, TDS is deducted at 12.5% (plus applicable surcharge and 4% cess, an effective rate of about 14.95%) on the capital gain. (Property acquired before 23 July 2024 may, at the seller's option, instead use the older 20%-with-indexation basis.) For a short-term sale (held 24 months or less), the gain is taxed at the NRI's slab rate, effectively up to 30% plus surcharge and cess.

The crucial catch: in the absence of any certificate, the Income Tax Department's default position is that the buyer deducts TDS on the entire sale consideration, not just on the gain. On a multi-crore flat that can mean tens of lakhs locked with the tax department until the NRI files a return and claims the excess back. This is exactly why a lower-deduction certificate, explained further down, is so valuable.

Capital Gains: How the Profit Is Taxed

The actual tax you owe is on the capital gain, not the sale price. For transfers on or after 23 July 2024, long-term capital gains (LTCG) on property are taxed at 12.5% without indexation. Short-term gains are added to total income and taxed at slab rates. You can reduce or eliminate the LTCG liability through reinvestment exemptions:

• Section 54 — reinvest the long-term capital gain in another residential house in India (purchase within 2 years, or construct within 3 years) to exempt the reinvested gain.
• Section 54EC — invest the gain in specified bonds (such as NHAI/REC capital-gains bonds) within 6 months, up to a ceiling of Rs 50 lakh, to claim exemption.

TDS Rates, Holding Period and Exemptions (As of 2026)

Item	Position for an NRI seller (verify current rules)
Long-term holding period	More than 24 months — taxed as LTCG
TDS u/s 195 (long-term)	12.5% + surcharge + 4% cess (effective ~14.95%) for transfers on/after 23 July 2024, on gain (or on gross value without a certificate); pre-23 Jul 2024 acquisitions may opt for 20% with indexation
TDS u/s 195 (short-term)	Slab rate, up to ~30% + surcharge + cess
LTCG tax rate	12.5% without indexation (transfers on/after 23 July 2024)
Resident-seller TDS (for contrast)	Only 1% u/s 194-IA — does NOT apply to NRI sellers
Section 54 exemption	Reinvest gain in another residential house in India
Section 54EC exemption	Specified bonds within 6 months, up to Rs 50 lakh
Lower/NIL TDS	Apply u/s 197 so TDS is on actual gain, not gross value

The Lower / NIL Deduction Certificate (Section 197)

Because the default TDS can fall on the whole sale value, the single most important step for an NRI seller is to apply to the jurisdictional Assessing Officer for a lower-deduction certificate under Section 197. This certificate directs the buyer to deduct TDS only on the actual computed gain — and at a rate that matches your real liability — rather than on the gross consideration. Applying online ahead of the sale (using Form 13) typically takes a few weeks, so start early. Without it, you can be left chasing a large refund for a year or more. This is the most common avoidable mistake NRI sellers make. Our companion notes on the NRI guide to buying property in Hyderabad and the NRI home loan in India cover the buy-side mechanics that set up a clean future sale.

A Worked Example (Indicative — Verify)

Suppose an NRI sells a Hyderabad flat for Rs 2.60 crore that was originally bought for Rs 2.10 crore, held for more than 24 months. The indicative long-term capital gain is roughly Rs 50 lakh. At an LTCG rate of 12.5%, the actual tax works out to about Rs 6.25 lakh (before surcharge and cess, and ignoring any Section 54/54EC exemption that could reduce it further).

Now look at the cash-flow difference. Without a Section 197 certificate, the buyer may deduct TDS at 12.5% (plus surcharge and cess) on the full Rs 2.60 crore — that is in the region of Rs 32 lakh+ held back, far more than the ~Rs 6.25 lakh actually owed, leaving the NRI to reclaim the excess by filing a return. With a lower-deduction certificate, TDS is applied only to the Rs 50 lakh gain, so roughly Rs 6–7 lakh is withheld — close to the real liability and no large lock-up. These numbers are indicative for 2026 and ignore surcharge, cess, exemptions and your exact figures; confirm everything with a chartered accountant.

After Tax: Repatriating the Sale Proceeds

Once the tax and TDS are settled, an NRI can repatriate the sale proceeds abroad within FEMA limits — generally up to USD 1 million per financial year from an NRO account — supported by Form 15CA and Form 15CB certified by a chartered accountant. Repatriation of the originally remitted amount used for purchase is usually freer, while gains move within the annual cap. Because the documentation must line up with how the property was funded, plan this alongside the sale rather than after it. See our detailed note on repatriation of sale proceeds for NRIs for the step-by-step process.

Plan Your Exit Tax Before You Buy at Kukatpally

Godrej Brooklyn Avenue in Kukatpally enters at around Rs 2.10 crore and sits near JNTU College Metro Station on west Hyderabad's Red Line, a corridor that supports both rental demand and capital appreciation. For an NRI buyer, that appreciation is good news only if the exit is planned. Keep clean records of the purchase remittance, hold the property beyond 24 months to qualify for the lower LTCG rate, budget for surcharge and cess, and apply for a Section 197 certificate well before signing the sale deed. Doing so converts a potentially painful TDS lock-up into a smooth, tax-efficient exit. Tax rules change frequently, so always verify the current position and consult a qualified CA before transacting.

Frequently Asked Questions