NRIs in the US Selling Property in India: Understand TDS Before You Sign Anything

Selling a family home is never just a transaction. For many NRIs, it is the flat their parents bought with years of savings, the house where they grew up, or a plot their father insisted they keep “for the future”. When the decision finally comes to sell, emotions are already heavy. Then comes the shock: the buyer says they must deduct a large amount as TDS, often calculated on the entire sale price, and that money will not reach you until a refund is processed, sometimes many months later.

This guide is for NRIs in the US who are planning to sell property in India. It explains how NRI property sale TDS works in 2026 under the new Income-tax Act, why so much is often deducted, how a Form 128 lower TDS certificate can help, what changed for buyers from October 2026, and the main steps to bring the money to the US. I am not a chartered accountant, and property sales have many details, so please work with a CA who regularly handles NRI sales. But you should walk into that meeting knowing what to ask.

The Sale That Locked Up Twenty Lakhs

Let me describe a scene I have heard many times. An NRI engineer in Chicago decides to sell her late father’s flat in Vijayawada. The buyer is a young local family. The price is agreed, and everyone is happy, until the buyer’s CA calculates TDS. Because she is a non-resident and has no certificate, the buyer will deduct tax on the entire sale price at the full rate. Roughly twenty lakh rupees will go to the government before she sees a rupee.

Her actual tax, after counting what her father paid for the flat years ago and the improvements, is far lower. She will get the extra back eventually, after filing a return and waiting for a refund. But she had planned to use that money for her mother’s care, and now it is stuck.

A friend tells her about the lower TDS certificate. She applies, but it takes weeks, and the sale date has to move. The buyer is understanding, but nervous. In the end it works out, but she says she wishes someone had told her about all this two months earlier. This article is that early warning.

Why NRI Property Sale TDS Takes So Much of the Price

When a resident sells property, the buyer deducts a small TDS on the sale value. When a non-resident sells property, the rules are different. The buyer must deduct TDS under the provisions for payments to non-residents, which under the Income-tax Act 2025 is Section 393(2), formerly Section 195 of the old Act.

In principle, TDS applies to the capital gain, not the full sale price. But in practice, as CA Durgesh Chavda explains in a guide reviewed on 23 October 2026, buyers usually deduct on the full sale price unless they hold a lower deduction certificate. Buyers do this because they cannot verify your cost of purchase or your exemptions, and if they deduct too little, they become liable. So they play safe, and you bear the cost.

The rates are also significant. For long-term property, held more than 24 months, the base rate for NRIs is 12.5% without indexation, which becomes 13% with the 4% cess, about 14.3% with a 10% surcharge when the gain exceeds Rs 50 lakh, and about 14.95% with a 15% surcharge when it exceeds Rs 1 crore, according to the same guide. For short-term property, held 24 months or less, slab rates apply, typically 30% plus surcharge and cess.

So, in a typical NRI property sale TDS case, on a flat sold for Rs 1.5 crore, if the buyer deducts about 13% to 15% on the full price, Rs 20 lakh or more can be held back, even if your actual gain is much smaller.

NRI Capital Gains Property India: How the Gain Is Calculated

To understand how much tax you actually owe, you need to understand NRI capital gains property India rules in simple terms.

NRI property sale TDS is deducted by the buyer, not the seller, which is why the seller has to act early. Filing Form 128 NRI sellers use for a lower deduction certificate before the deal, and working out NRI capital gains property India rules in advance, keeps the TDS on property purchase from NRI close to the real tax. It also makes it easier to repatriate property sale proceeds later, because the papers already match.

Your capital gain is roughly the sale price minus the cost of acquisition and the cost of improvements, minus expenses directly related to the sale like brokerage. If you inherited the property, the cost is generally the cost to the previous owner, and the holding period includes their holding.

An important detail: for property bought before 23 July 2024, residents may choose an older method with indexation at 20%. According to the Chavda guide, that option is available only to resident individuals and HUFs, not to NRIs. So NRIs generally pay 12.5% on the gain without indexation for long-term property.

There are also relief options when you reinvest. The guide lists Section 82, formerly Section 54, for buying a new house; Section 85, formerly 54EC, for specified bonds up to Rs 50 lakh; and Section 86, formerly 54F, for investing other gains into a house. Each has conditions and time limits, and some have changed numbers but not purpose. A CA should check which apply to you.

Calculate your expected gain and tax before you agree a sale date. That number is what you will use for the lower TDS certificate application.

Form 128 NRI: The Lower TDS Certificate

The most powerful tool to reduce NRI property sale TDS is the lower or nil TDS certificate. Under the new Act, the application is Form 128, which replaced the old Form 13. A May 2026 explainer by Dinesh Aarjav and Co. describes it as issued under Section 395(1).

You apply online through the TRACES portal. The explainer lists the documents typically needed: identity documents such as PAN, passport and OCI or visa details; property documents including the purchase deed, sale agreement, stamp duty valuation and proof of improvements; tax documents such as past returns and your annual tax statement; the buyer’s PAN, proposed sale price and payment schedule; and a capital gains working with annexures.

Processing time can be 2 to 8 weeks, depending on jurisdiction, complexity, document quality, exemption claims and officer queries, according to the same explainer, which recommends starting 30 to 60 days before the expected sale date. The certificate tells the buyer to deduct at a lower rate, closer to your real tax.

For a Form 128 NRI application, organisation is everything. Gather your father’s purchase documents, receipts for any renovation, and a clear calculation of your gain. Officers process clear files faster. Missing documents lead to queries and delays.

TDS on Property Purchase From NRI: What Changed for Buyers in October 2026

For years, one of the biggest practical problems was on the buyer’s side. Buyers purchasing from an NRI needed a TAN, a tax deduction account number, and had to file quarterly TDS returns. Many individual buyers had never done this and found it intimidating. Some backed out of deals with NRIs because of it.

According to the Chavda guide, from 1 October 2026, under CBDT Notification No. 121/2026, resident individual and HUF buyers no longer need a TAN for TDS on property purchase from NRI sellers. They can deposit TDS using their PAN through Form 141 with a new schedule, within 30 days from the end of the month of deduction, and issue Form 132 to the seller. Companies and firms buying from NRIs still need a TAN. The Free Press Journal had earlier reported, in April 2026, that the new Act allows TDS on property purchases from non-residents to be paid using PAN.

This is good news for NRI sellers. It makes your property easier to sell to ordinary families, who were sometimes scared off by TAN paperwork. When you negotiate, you can reassure buyers that the process is simpler now, while still pointing them to a CA.

Make sure your buyer actually deposits the TDS and issues the certificate. You need it to claim credit when you file your return. Ask for the certificate within the timeline and check that it appears in your annual tax statement.

Repatriate Property Sale Proceeds to the US

Once the sale is complete and NRI property sale TDS is handled, the next question is how to repatriate property sale proceeds to your US bank account.

Sale proceeds usually go into your NRO account, since the property was in India. To move money from NRO to abroad, banks generally need a remitter’s declaration and, often, a CA certificate confirming that tax has been paid or provided for. Under the new Act’s numbering, the old Form 15CA is now Form 145 and Form 15CB is now Form 146, according to the TrustNRI mapping we cited in our article on the Income Tax Act 2025 for NRIs.

Banking rules also set limits on how much you can repatriate from NRO balances each financial year; many banks describe this as up to USD 1 million per financial year for eligible NRIs, subject to documents. Your bank will confirm the current limit and paperwork. If you plan to move a large amount, talk to your bank before the sale so you know the timeline.

Exchange rates and transfer fees matter too. Compare how many dollars reach your US account through different channels. For large amounts, even a small difference in rate adds up.

A Short Note You Can Share With Your Buyer

Many NRI sellers find it helpful to give the buyer a short, friendly note explaining the process, so the buyer does not panic about TDS on property purchase from NRI sellers. Here is the kind of note we suggest, which your CA can adjust.

Explain that because you are a non-resident, the buyer has to deduct TDS from the payment under the Income-tax Act 2025 provisions for payments to non-residents, and deposit it with the government. Explain that you have applied for, or obtained, a lower TDS certificate on Form 128, and attach a copy if it has been issued, so the buyer deducts at the rate shown in the certificate. Mention that, from 1 October 2026, according to recent guidance, resident individual and HUF buyers can deposit this TDS using their PAN through Form 141 instead of getting a TAN, which makes it simpler. Ask the buyer to share the TDS certificate with you after deposit.

Offer the contact of your CA for any questions. Buyers are often relieved to know that an expert is involved and that the process has become easier.

This small step builds trust. Buyers who understand TDS on property purchase from NRI sellers are less likely to delay, over-deduct or back out. And it shows that you are a careful, honest seller, which makes the whole sale smoother.

If the buyer is taking a home loan, their bank will also be involved in the payment. Share the same note with the bank’s loan officer, so the TDS is handled correctly when the loan amount is released. Banks handle many such cases and usually appreciate clear instructions. With everyone informed, NRI property sale TDS becomes a routine step rather than a last-minute crisis at the registration office.

The US Side: Reporting the Sale and Claiming Credit

If you are a US tax resident, the sale of property in India is generally also reportable on your US tax return. The US taxes its residents on worldwide income, so the capital gain may be taxable in the US too, calculated under US rules, which can differ from Indian rules.

To avoid paying tax twice on the same gain, you may be able to claim a foreign tax credit in the US for the Indian tax you actually paid, not the excess TDS that you later get refunded. That is another reason to file your Indian return and claim any refund: your US credit should be based on your real Indian tax.

Keep all documents: sale deed, purchase deed, TDS certificates, your Indian return and assessment, and records of the remittance to the US. Your US tax preparer will need them.

Also remember US foreign account reporting. If your NRO account balance rises sharply because of sale proceeds, it may trigger FBAR or Form 8938 requirements, even if just for a short time. Our guides on forgetting to file FBAR and forgetting to file Form 8938 explain what to do if you miss them.

Selling Inherited Property as an NRI

A large share of NRI property sales involve inherited homes. If you inherited a flat or house from a parent, NRI property sale TDS works the same way at the point of sale, but a few extra steps come before it.

First, make sure the property is legally in your name. That usually means a succession certificate, a registered will with probate where required, or a family settlement, followed by mutation in the local municipal or revenue records. Buyers and their banks will check this. A sale cannot go smoothly if title is unclear.

Second, collect the original purchase documents of the previous owner. For NRI capital gains property India purposes, the cost of acquisition for inherited property is generally the cost to the previous owner, and the holding period includes their holding. Without the original deed or proof of purchase price, your gain may be calculated as much higher than it really is, which means more tax and more TDS.

Third, think about timing with other heirs. If siblings also inherited a share, each person’s share of the gain is taxed in their hands. Resident siblings and NRI siblings may face different TDS treatment on their shares, so plan the sale with everyone involved.

Fourth, keep the emotional and practical decisions separate. Sometimes families rush to sell soon after a parent’s death to avoid disputes. Take time to get the documents right. A few extra weeks of paperwork can save lakhs in over-deducted TDS and months of waiting.

Joint Owners: When One Sibling Is an NRI and Another Is Resident

Many properties are jointly owned by siblings or by a parent and child, with some owners living in India and some abroad. This creates a common confusion about NRI property sale TDS.

TDS is applied per seller, based on each seller’s share and residential status. For the resident co-owners, the buyer deducts TDS under the rules for residents, usually a small percentage. For the NRI co-owner, the buyer deducts TDS on their share under the non-resident rules, at the higher rates described above.

Each NRI co-owner should consider their own Form 128 NRI application for a lower TDS certificate, based on their own share of the gain. One sibling’s certificate does not cover another.

Make sure the sale agreement clearly states each owner’s share and how the payment will be split. Buyers sometimes make the mistake of deducting the NRI rate on the full price, or the resident rate on everyone. Both create problems. A clear agreement and a CA who explains it to the buyer avoid this.

Should You Sell Now or Wait?

Some NRIs ask whether they should wait to sell until they move back to India, hoping to avoid the higher NRI TDS. The honest answer is that it depends on many factors, and TDS alone should not drive the decision.

TDS is not the final tax; it is an advance. If you sell as an NRI with a proper lower TDS certificate, the TDS can be close to your actual tax. If you sell without one, you can still get the excess back by filing a return. So the real cost of selling as an NRI is mostly a cash-flow and paperwork cost, not necessarily a higher final tax.

On the other hand, your residential status affects other things: how your worldwide income is taxed, whether indexation options apply (which recent guidance says are only for residents), and how the US taxes the sale if you are still a US tax resident. If you are planning a permanent move back within a year or so, discuss with your CA whether timing the sale around your change in status makes sense for your total tax across both countries.

And remember the property market itself. Waiting a year for a small tax benefit can be outweighed by price changes, maintenance costs or family needs. Make the decision with the full picture, using our moving back to India from USA checklist if a return is part of your plan, and the substantial presence test calculator to understand your US tax residency for the year of sale.

Common Mistakes in NRI Property Sale TDS

The first mistake is signing the sale agreement before planning TDS. Once a date is fixed, there may not be time to get a lower TDS certificate. Plan first, then sign.

The second is assuming the buyer knows the rules. Many buyers have never bought from an NRI. Some deduct the resident rate, which leaves them liable and can cause problems for you later. Others deduct far more than needed. Guide them, ideally through your CA.

The third is losing the original purchase documents. Without them, proving your cost is hard, and your NRI capital gains property India calculation may be higher than it should be.

The fourth is not filing an Indian return after the sale. Without a return, you cannot claim back excess TDS. Some NRIs think TDS is the end of the matter. It is not.

The fifth is forgetting the US side. US tax residents generally need to report the sale on their US return and may owe US tax, with credit for Indian tax actually paid.

The sixth is rushing the money out. Trying to repatriate property sale proceeds before the paperwork is complete can lead to delays at the bank. Do the forms properly, and plan the transfer with your bank.

The seventh is mixing NRE and NRO accounts. Sale proceeds of Indian property generally go to NRO. Depositing them wrongly can create compliance problems that take time to untangle.

A Step-by-Step Plan for Your Sale

Here is the NRI property sale TDS plan I suggest for NRIs selling property in India.

Two to three months before you want to sell, collect all property documents: purchase deed, previous sale deeds if inherited, tax receipts, improvement bills and any loan closure papers. Meet a CA who handles NRI property sales. Calculate your expected capital gain and tax.

Once you have a buyer and an agreed price, apply for the Form 128 lower TDS certificate on TRACES with complete documents. Tell the buyer about the certificate and the expected timeline, so the sale date is set realistically.

At signing, make sure the buyer deducts TDS at the certificate rate, or the standard rate if no certificate is in place, deposits it correctly and gives you the TDS certificate.

After the sale, deposit proceeds into your NRO account, and work with your CA and bank on the remittance forms to repatriate property sale proceeds to the US.

File your Indian return for the tax year of the sale, claim any refund, and give your US tax preparer the full set of documents for your US return and foreign tax credit.

A Realistic Timeline From Decision to Dollars

It helps to see the whole journey on one line, because NRIs often underestimate how long it takes.

Deciding and gathering documents can take a month or more, especially for inherited property. Finding a buyer and agreeing a price may take weeks to months, depending on the market. Applying for the Form 128 NRI certificate can take 2 to 8 weeks, according to the explainer we cited, and should overlap with the buyer search. Registration and payment usually happen on a fixed day. Depositing the proceeds into NRO and completing remittance forms with your bank can take another few days to a few weeks. Filing your Indian return and receiving any refund happens after the tax year ends, which can be many months later.

So from the day you decide to sell to the day the last rupee reaches the US, three to six months is common, and longer is possible. If you need the money by a certain date, for example for a home purchase in the US or a family need, start earlier than you think. Planning with this timeline in mind takes much of the stress out of the process.

Emotional Decisions and Family Conversations

I want to say something about the human side. Selling inherited property often involves siblings, a surviving parent, or relatives who feel strongly. Disagreements about price, timing or whether to sell at all can be painful.

Talk early and openly with family. If the property is jointly owned, each owner’s share and tax position may be different, especially if some are residents and some are NRIs. Each NRI co-owner may need their own TDS planning and certificate.

If a parent is still living in the property, think carefully about their housing and wishes before selling. Money can be recovered with the right paperwork. Trust in a family, once broken, is much harder to restore.

If the sale is part of a larger decision to move back to India or to settle permanently in the US, our article on the NRI return dilemma may help you think through it.

Questions NRIs Ask About Property Sale TDS