TDS on NRI Property Sales: Section 195, Decoded
The buyer is holding back a huge chunk of your sale money and calling it tax. It is almost certainly far more than you actually owe. Here is why it happens and how to get it reduced.
- Working since 1995
- Government approved valuer
- ISO 9001 certified
- Reports in 48 to 72 hours
- Trusted by 800 plus chartered accountants, CPAs and lawyers
What is happening and why
When somebody buys property from a person who does not live in India, the law makes the buyer responsible for deducting tax before paying the seller.
The buyer is personally on the hook if they get it wrong. So buyers do the safe thing and deduct the maximum. Their accountant tells them to, and honestly, in their position most people would.
The result is that a very large share of your sale price gets sent to the tax department instead of to you.
Here is the part that catches people out
The deduction is calculated on the whole sale price, not on your profit.
Read that again, because it is the heart of the problem. If you sell for one crore and your actual gain is twenty lakh, tax gets deducted as though the entire crore were income. You may end up with far more deducted than your total tax liability.
You can get it back, eventually
The excess is refundable. You file a return in India, show the real gain, and claim the difference back.
The catch is time. That refund can take many months. Meanwhile a large amount of your own money is sitting with the tax department, and if you were planning to use those funds for something, they are not available.
The better route: ask for a lower deduction upfront
Rather than overpaying and waiting for a refund, you can apply to the tax department in advance for a certificate that tells the buyer to deduct less.
The application asks you to demonstrate what your actual gain will be. Which means showing what the property cost you. Which, if it was bought before April 2001, means a properly evidenced 1 April 2001 valuation.
That is where we come in. The valuation is the evidence the whole application rests on.
- Get the valuation done firstBefore the sale completes, ideally before the agreement is signed. This establishes your cost properly.
- Your accountant works out the real gainSale price, less the indexed cost, less expenses.
- Apply for the certificateYour chartered accountant files the application with the valuation as supporting evidence.
- The buyer deducts the lower amountOnce the certificate is issued, the buyer deducts as directed rather than at the full rate.
Start early. This is the whole game.
The single most common thing we hear is a family calling after the sale has completed, asking whether the deduction can be undone.
Once the money is deducted and paid over, it can only come back as a refund, which takes months. Applying beforehand takes planning. Start when you decide to sell, not when the buyer is ready to pay.
Questions people ask us
- How much gets deducted?
It depends on how long you held the property and on the current rates, and it is applied to the whole sale price rather than to your gain. Your accountant will confirm the exact rate for your case. The point is that it is usually far more than you actually owe.
- The buyer says he has no choice.
He is right, unless you obtain the certificate for a lower deduction. With that certificate in hand, he can legally deduct less. Without it, he is protecting himself, and you cannot really blame him.
- Can I apply for the certificate myself from abroad?
The application is filed in India and it is normally handled by a chartered accountant. We provide the valuation that supports it. If you do not have an accountant in India, we can connect you with one.
- How long does the certificate take?
It varies. Allow several weeks and start well before the sale is due to complete. This is the reason we tell people to begin the moment they decide to sell.
- The property was bought in 1990. Does that help?
Considerably. Because it was bought before April 2001, you can use the 1 April 2001 value as your cost instead of the 1990 price. That raises your cost, lowers your gain, and directly reduces both the tax and the deduction you are applying to lower.
- I have already sold and the money has been deducted.
Then the route is a refund. File your return showing the real gain and claim the excess back. You will still need a proper valuation to establish your cost, so the report is worth getting either way.
Checked by Parish Rao, Chartered Engineer and Government Approved Valuer.
Page last checked on 23 August 2026.
How we work with families living abroad
The full guide to capital gains valuation
Get a free call back
Leave your number and we will call you back. We will tell you which report you need and what it costs, free of charge.
In a hurry? Call +91 98681 69747 instead.