Why the withholding rate for NRI sellers is much higher than for resident sellers — and what buyers must do.
Standard TDS under Section 194-IA applies: 1% of the sale value if it exceeds ₹50 lakh, deducted by the buyer and deposited against the seller's PAN.
TDS under Section 195 applies instead, and it's significantly higher — typically 20% (plus surcharge and cess) on long-term capital gains, or higher still for short-term gains, calculated on the gain, not a flat percentage of sale value in most cases.
The buyer is legally responsible for deducting this correctly and depositing it — getting it wrong exposes the buyer, not just the seller, to interest and penalties.
Expect the buyer to withhold a much larger share of your sale proceeds than a resident seller would face. This is exactly what Form 13 (lower/nil deduction certificate) exists to reduce — see the next guide.
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