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TDS on NRI Property — Section 195, Rates & Form 15CA/15CB Guide
Updated: 3 June 2026
When buying immovable property from an NRI seller, the buyer must deduct TDS under Section 195 at 20% (LTCG) or 30% (STCG) on the full sale consideration — not just the gain. The NRI seller can apply for a Lower Deduction Certificate (Section 197) to reduce TDS to the actual tax liability. Repatriation of sale proceeds abroad requires Form 15CB (CA certificate) + Form 15CA (online declaration). Failure by the buyer to deduct TDS triggers interest and penalty under Section 201.
20% TDSon full sale price when buying property from an NRI — applies under Section 195, not 194-IA.
TDS on Property — NRI Buyer vs NRI Seller Scenarios
Scenario
Section
TDS Rate
Who Deducts
TDS Base
Resident buyer buying from NRI (LTCG)
Section 195
20% + surcharge + cess
Resident buyer
Full sale consideration
Resident buyer buying from NRI (STCG)
Section 195
30% + surcharge + cess
Resident buyer
Full sale consideration
NRI buying from Resident (above ₹50L)
Section 194-IA
1%
NRI buyer
Full sale consideration
NRI seller with Lower Deduction Certificate
Section 197
As per LDC (can be 0–20%)
Buyer
As specified in LDC
NRI seller — DTAA benefit applicable
Section 195 + DTAA
As per applicable DTAA rate
Buyer
Capital gain amount
Resident buyer from Resident seller (above ₹50L)
Section 194-IA
1%
Buyer
Full sale consideration
TDS Compliance Steps — Buying Property from NRI
Step
Action
Form / Portal
Deadline
1
Obtain TAN (if not held)
Form 49B / NSDL TIN portal
Before first payment
2
Deduct TDS from payment to NRI
—
At time of each payment
3
Deposit TDS to government
Challan ITNS 281
7th of following month (30th for March)
4
File quarterly TDS return
Form 27Q
31st of month after quarter end
5
Issue TDS certificate to NRI
Form 16A
15 days after Form 27Q filing
6
NRI files Form 15CB (via CA)
Form 15CB
Before remittance abroad
7
Submit Form 15CA online
IT Portal → Form 15CA
Before bank remittance
Form 15CA & 15CB — Repatriation of NRI Property Proceeds
An NRI seller cannot freely repatriate sale proceeds abroad without TDS compliance certification. The process involves two documents:
Form 15CB is a certificate issued by a practicing Chartered Accountant. It confirms: the nature of the payment, applicable TDS rate and amount, whether DTAA benefit has been applied, and that Indian tax laws have been complied with. Without 15CB, the bank will not process the wire transfer.
Form 15CA is an online undertaking filed by the remitter (usually the NRI or their authorized representative) on the Income Tax e-filing portal. It references the Form 15CB certificate number and certifies that TDS has been correctly deducted. The IT department uses Form 15CA to track foreign outflows subject to Indian tax.
For remittances below ₹5 lakh in a financial year (aggregate), a simplified Form 15CA Part A suffices without a 15CB. Above ₹5 lakh, full Part C of Form 15CA and a 15CB are required.
Lower Deduction Certificate — Section 197
The default TDS rate of 20–30% on the full sale price can significantly exceed the NRI's actual tax liability (which is on capital gains, after cost inflation indexing and exemptions). The NRI seller should apply to the Income Tax Assessing Officer (AO) in their jurisdictional ward for a Lower Deduction Certificate (LDC) under Section 197.
The application (via Form 13 on the IT portal) should include: cost of acquisition with indexation, improvement costs, Section 54 or 54EC reinvestment details, DTAA country of residence and applicable rate. If satisfied, the AO issues a certificate valid for the financial year, specifying the reduced TDS rate. The buyer must deduct TDS at the LDC rate, not the default rate.
Frequently Asked Questions
What TDS rate applies when buying property from an NRI in India?
When buying immovable property from an NRI seller, the buyer must deduct TDS under Section 195 at 20% (plus surcharge and cess) on the full sale consideration — not just the capital gains portion. This is the default rate for long-term capital gains on property. If the property is held for less than 2 years (short-term), TDS is deducted at 30% (the peak slab rate for non-residents). These rates apply unless the NRI has obtained a Lower Deduction Certificate under Section 197 from the Income Tax Department, or the transaction qualifies for a reduced rate under a DTAA (Double Taxation Avoidance Agreement) between India and the NRI's country of residence.
How does the buyer deposit TDS on NRI property purchase?
The buyer must: (1) Obtain a TAN (Tax Deduction Account Number) if not already held; (2) Deduct TDS from the payment made to the NRI seller; (3) Deposit the TDS with the government using Challan ITNS 281 within 7 days from the end of the month of deduction (or within 30 days for March deductions); (4) File TDS return in Form 27Q (for non-resident payments) quarterly; (5) Issue Form 16A (TDS certificate) to the NRI seller within 15 days of filing Form 27Q. Note: for resident seller transactions under Section 194-IA, Form 26QB is used instead. NRI property transactions use the full quarterly TDS return process under Section 195.
Can an NRI seller get lower TDS on property sale under Section 197?
Yes. An NRI seller can apply to the Income Tax Assessing Officer (AO) under Section 197 for a Lower Deduction Certificate (LDC) or Nil Deduction Certificate. The NRI must file an application with estimated capital gains, cost of acquisition, improvement costs, and expected tax liability after DTAA benefits and exemptions (such as Section 54 / 54EC reinvestment). If granted, the AO issues a certificate specifying the reduced TDS rate. The buyer must deduct TDS at the rate mentioned in the LDC instead of the default 20%/30%. This significantly improves cash flow for the NRI seller as they don't have to wait for ITR refund processing.
What is Form 15CA and Form 15CB in NRI property transactions?
Form 15CB is a certificate from a Chartered Accountant certifying the nature of the remittance, applicable TDS rate, DTAA provisions, and that proper TDS has been deducted. Form 15CA is an online declaration by the remitter (buyer's bank or the buyer) submitted on the Income Tax portal before remitting funds abroad to the NRI seller. The process: (1) NRI seller's CA prepares Form 15CB; (2) Buyer or NRI submits Form 15CA online referencing the 15CB; (3) Bank processes the international wire transfer only after receiving Form 15CA acknowledgment. These forms ensure that TDS compliance is verified before Indian tax money leaves the country.
What happens if a buyer does not deduct TDS when buying from an NRI?
Failure to deduct TDS under Section 195 makes the buyer an "assessee in default" under Section 201. Consequences: (1) Interest at 1% per month from the date TDS was deductible to the date of actual deduction; (2) Interest at 1.5% per month from the date of deduction to the date of deposit; (3) Penalty under Section 271C equal to the amount of TDS not deducted; (4) Prosecution in serious cases. Additionally, the buyer cannot claim the property purchase as a deductible expense in their books until TDS is deposited. The NRI seller's ability to repatriate proceeds abroad is also blocked until TDS compliance is established.
