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The taxation framework for NRIs selling property in India has undergone a major transformation under the new Income-tax Act, 2025 and Income-tax Rules, 2026.
One of the biggest changes is the replacement of old Form 13 with the new Form 128 for obtaining a Lower/Nil TDS Certificate.
At the same time, there is widespread confusion in the market regarding whether buyers still need TAN while purchasing property from NRIs.
Many buyers, brokers, and even tax professionals are incorrectly assuming that TAN has already been abolished for NRI property transactions. However, this is not fully correct.
As clarified in recent expert discussions and media reports, the TAN-based TDS mechanism for NRI property transactions continues to remain mandatory until 30 September 2026. The PAN-based simplified mechanism will apply only from 1 October 2026 onwards.
This article explains everything NRIs, buyers, builders, brokers, and tax professionals need to know about:
A Lower/Nil TDS Certificate is an approval issued by the Income Tax Department allowing the buyer to deduct TDS at a lower rate or nil rate instead of deducting tax at standard rates.
Under the new Income-tax Act, 2025:
This certificate is extremely important in NRI property sale transactions because TDS is generally deducted on the entire sale consideration, not merely on actual capital gains.
In most NRI property transactions, buyers deduct TDS on the gross sale amount.
Example:
| Particulars | Amount |
| Sale Value | ₹2 Crores |
| Actual Capital Gain | ₹20 Lakhs |
| Possible TDS Without Certificate | On entire ₹2 Crores |
| Actual Tax Liability | Only on gains |
Without Lower TDS Certificate:
With Lower TDS Certificate:
Yes — TAN is Still Mandatory Till 30 September 2026
This is currently one of the most misunderstood aspects of NRI property taxation.
Several taxpayers are incorrectly assuming that buyers no longer need TAN for purchasing property from an NRI.
However, recent expert clarifications confirm that:
This means:
Until 30 September 2026
Buyer must:
From 1 October 2026
Government proposes a PAN-based simplified mechanism similar to resident property transactions.
Under Income-tax Act, 2025:
| Earlier Law | New Law |
| Section 195 | Section 393(2) |
| Form 13 | Form 128 |
| Form 27Q | Form 144 |
| Form 16A | Form 131 |
| Form 15CA | Form 145 |
| Form 15CB | Form 146 |
Long-Term Capital Asset
| Particulars | Less than ₹50 Lakhs | ₹50 Lakhs – ₹1 Crore | ₹1 Crore – ₹2 Crore | ₹2 Crore – ₹5 Crore | Above ₹5 Crore |
| Base TDS Rate | 12.50% | 12.50% | 12.50% | 12.50% | 12.50% |
| Surcharge | Nil | 10% | 15% | 15% | 15% |
| Health & Education Cess | 4% | 4% | 4% | 4% | 4% |
| Effective TDS Rate | 13% | 14.30% | 14.95% | 14.95% | 14.95% |
Important: The maximum effective TDS rate for NRIs selling property in India is 14.95%, including surcharge and cess.
Short-Term Capital Asset
Generally:
However, buyers often deduct TDS on full sale consideration rather than actual taxable gains.
This is precisely why Form 128 becomes extremely important.
Form 128 is the new application form used for:
It replaces earlier Form 13.
As per official Income Tax Department guidance:
Yes.
Both residents and non-residents can apply for Lower/Nil deduction certificates under Form 128.
NRIs selling:
can apply before execution of sale transaction.
Step 1 – Compute Capital Gains
Proper computation includes:
Step 2 – Prepare Documentation
Documents generally required:
Identity Documents
Property Documents
Tax Documents
Buyer Details
Step 3 – File Form 128 on TRACES
Official process:
TRACES → Dashboard → e-File & View → File Forms → Form 128
Step 4 – Upload Supporting Documents
Capital gains working and annexures are uploaded.
Step 5 – Department Review
Assessing Officer may:
Step 6 – Certificate Issuance
Once approved:
How Much Time Does Form 128 Take?
Typically:
2 to 8 weeks
depending on:
Therefore, NRIs should ideally begin process at least 30–60 days before expected sale date.
1. Assuming TAN is Already Removed
This is currently the biggest compliance mistake. TAN remains mandatory till 30 September 2026.
2. Using Wrong TDS Section
Some buyers wrongly use resident property provisions instead of non-resident provisions. This may result in short deduction exposure.
3. Non-Filing of Form 144
Even after TDS deposit, quarterly return filing is still mandatory for NRI transactions.
4. Delayed Lower TDS Application
Late filing may delay registration and payment release.
5. Incorrect Capital Gains Computation
Wrong indexation or exemption calculations frequently trigger notices.
6. Ignoring FEMA & Repatriation Rules
Sale proceeds remittance abroad may require:
| Earlier Form | New Form | Purpose |
| Form 13 | Form 128 | Lower/Nil TDS Certificate |
| Form 27Q | Form 144 | Quarterly TDS Return |
| Form 16A | Form 131 | TDS Certificate |
| Form 15CA | Form 145 | Remittance Declaration |
| Form 15CB | Form 146 | CA Certificate |
| Form 26QB | Form 141 | Resident Seller Property TDS |
The revised Form 128 introduces major technology-driven upgrades:
Yes.
NRIs residing in countries like:
may claim treaty benefits under applicable DTAA provisions.
Proper DTAA analysis becomes extremely important in cross-border NRI tax planning.
If higher TDS is deducted:
This is why obtaining Lower TDS Certificate before transaction is usually the preferred strategy.
At Dinesh Aarjav & Associates, we specialise in NRI taxation and cross-border advisory services.
We assist NRIs globally with:
With 25+ years of experience and global presence, our team regularly handles complex NRI property transactions across jurisdictions.
The 2026 regime has significantly changed the compliance landscape for NRI property transactions.
While Form 128 has modernised the Lower/Nil TDS application process, confusion around TAN applicability has created serious compliance risks for buyers and NRIs.
The key clarification remains:
Therefore, NRIs planning for selling NRI property in India should undertake proper tax planning well before execution of transaction to avoid:
Proper structuring and timely Form 128 application can save substantial taxes, improve cash flow, and ensure smooth execution of the transaction.
Budget 2026: Major Relief for NRIs Selling Property in India – TDS Compliance Simplified
US NRI Selling Property in India? Why This Wife Paid Zero Tax on ₹6 Cr Property Sale—But You Can’t
Selling Property in India as a U.S. Citizen or Tax Resident? Read This First
Aarjav Jain is the Executive Director at Dinesh Aarjav & Associates, specializing in India–US cross-border transactions, NRI taxation, international tax advisory, and global investment structuring. With over 10 years of experience in project financing and cross-border advisory, he assists NRIs and businesses with regulatory compliance, repatriation planning, and international transaction structuring.
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