NRI selling Indian property – is TDS required on the full sale value or only the capital gain?
I’m an NRI selling a residential property in India and would appreciate advice from anyone familiar with NRI property TDS / Section 195 (and the corresponding provisions under the Income-tax Act, 2025).
My facts:
- Property purchased in June 2018 for ₹49.90 lakh
- Stamp duty and registration were paid separately
- Proposed sale in October 2026 for ₹70 lakh
- Property has therefore been held for more than 24 months and should be LTCG
- I’m an NRI
- Sale proceeds will be credited to my Indian bank account; I am not planning to remit the money abroad
- The buyer wants to deduct 13.5% TDS on the entire ₹70 lakh, i.e. ₹9.45 lakh
The Income Tax Department's NRI property FAQ appears to say that for an NRI selling long-term immovable property, “the tax shall be deducted from the gains”, with a 12.5% LTCG rate for transfers on/after 23 July 2024. https://www.incometaxindia.gov.in/w/what-is-the-applicable-tds-rate-when-a-non-resident-sells-immovable-property-in-india-?utm_source=chatgpt.com
My approximate capital gain before considering stamp duty/registration and other eligible costs is only around ₹20.1 lakh.
The buyer is willing to deduct TDS based on the actual taxable gain, but his CA says they need an lower-TDS determination before doing so. We only have about 10 days before the proposed sale, so obtaining an order may be difficult.
My questions:
- If the buyer deducts TDS on the capital gain rather than the full ₹70 lakh without first obtaining the LDC, what is the actual legal risk/liability for the buyer?
- Is the buyer legally required to deduct TDS on the entire ₹70 lakh simply because I am an NRI, or can TDS be based on the taxable capital gain?
- If excess TDS is deducted on ₹70 lakh, I understand I can claim the excess back through my ITR, but that would unnecessarily block ~₹6–7 lakh. Is there a practical way to avoid this?
- Has anyone actually gone through the Form 129 / AO determination process recently, and how long did it take?
I’m particularly interested in responses from Indian CAs, tax lawyers, or people who have actually handled an NRI property sale.