What is TDS under Section 195?

TDS applicable when making payments to a non-resident, including property purchase.

Is 1% TDS applicable for NRI property?

No, 1% applies only to residents. NRI transactions attract higher TDS.

TDS return form filed for payments made to NRIs.

Yes, through a Lower TDS Certificate (Section 197).

Is TAN mandatory for buyer?

Yes, TAN is required for deducting and filing TDS.

NRI Property Tax Compliance

TDS on Property Purchase from NRI (Section 195) – Rules, Rates & Compliance

Buying property from an NRI in India?

You are legally required to deduct TDS under Section 195 — and mistakes can lead to heavy penalties. 👉 Get expert CA support for accurate TDS calculation, filing & compliance.

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Important Statutory Rule

Section 195 vs Section 194-IA

Resident seller TDS is 1% under 194-IA. For NRI sellers, Section 195 mandates 20%+ TDS plus TAN & Form 27Q return filing.

TAN is mandatory for the buyer

Form 27Q quarterly return required

Form 16A TDS certificate issuance

Avoid Costly Errors

Common Mistakes by Property Buyers

Many buyers make critical assumptions when dealing with NRI sellers, triggering demand notices.

Deducting only 1% TDS (incorrect – applies only to residents)

Not obtaining TAN

Wrong TDS calculation

Incorrect filing or delay in Form 27Q

Ignoring lower TDS certificate (leading to excess deduction)

👉 These mistakes can lead to penalties, interest & legal notices.

Statutory Framework

About TDS on NRI Property

When purchasing property from a Non-Resident Indian (NRI), the buyer must deduct TDS under Section 195 of the Income Tax Act.

👉 Unlike resident transactions, TDS is not 1% — it is significantly higher and more complex.

Mandatory Provisions

Key Rules Under Section 195

TDS is deducted on total sale value (not just capital gains)

Applicable for all property values (no ₹50 lakh threshold)

Buyer must obtain a TAN (Tax Deduction Account Number)

TDS must be deposited with the government

Return must be filed using Form 27Q

Tax Slabs & Computation

TDS Rates for NRI Property

Long-Term Capital Gains (LTCG)

20%

Plus applicable surcharge and cess

Applicable when property is held for more than 24 months before transfer.

Short-Term Capital Gains (STCG)

Slab Rates

As per applicable individual tax slab

Applicable when property is held for 24 months or less before transfer.

👉 Effective TDS can go 20%–30%+, depending on the case.

Full CA Solution

How We Help You

We provide complete end-to-end TDS compliance support:

Accurate TDS calculation (case-specific)

TAN application for buyer

Lower TDS certificate guidance (if applicable)

TDS payment & challan handling

Filing of Form 27Q

Issuance of TDS certificate (Form 16A)

Advisory to avoid future tax issues

Tax Optimization

Important: Lower TDS Option

In many cases, the seller (NRI) can apply for a Lower TDS Certificate under Section 197.

👉 This helps reduce TDS from 20–30% to actual tax liability

💡 We assist in:

Lower TDS application

Coordination between buyer & seller

Compliance planning

Learn more about Lower TDS Certificate (Section 197)

Structured Execution

Our Process

Smooth, compliant & fully managed process from valuation to certificate generation.

Step 101

Review property transaction details

Step 202

Calculate correct TDS liability

Step 303

Apply for TAN (if not available)

Step 404

Deduct & deposit TDS

Step 505

File Form 27Q

Step 606

Issue TDS certificate

👉 Smooth, compliant & fully managed process.

Target Audience

Who Needs This Service?

Property buyers purchasing from NRIs

Real estate investors

Brokers facilitating NRI deals

Anyone involved in NRI property transactions

Checklist

Documents Required

Buyer & seller PAN

Property agreement / sale deed

Payment details

NRI status proof

Lower TDS certificate (if applicable)

👉 Complete assistance provided.

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Trusted by NRI Property Buyers Across India

"Handled complete TDS filing for NRI property purchase."

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"Saved us from major compliance issues."

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"Very smooth and professional process."

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FAQs

Frequently Asked Questions

Clear answers to common questions about Section 195 TDS on NRI property.

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Avoid costly mistakes while buying property from an NRI.

Get expert CA support for accurate TDS calculation, filing, and compliance.

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