NRI Property Sales: Lower TDS Certificate Process (Form 13)

When a Non-Resident Indian (NRI) sells property in India, the buyer is legally obligated to deduct withholding tax (TDS) at a flat 20% on the gross sale value (plus surcharge and cess), resulting in a tax deduction that often exceeds the actual capital gains.

1. Why Apply for a Lower TDS Certificate (Section 197)?

If you sell a property for ₹1 Crore, the buyer will withhold ₹20 Lakhs + surcharges as TDS. However, your actual tax liability on capital gains might only be a fraction of that amount, especially if you plan to reinvest the gains under Section 54.

By obtaining a certificate under Section 197, the tax department authorizes the buyer to deduct tax at a much lower rate (e.g., 1% or 2% of the sale value).

2. Step-by-Step Application Process (Form 13)

Apply online via the Income Tax TRACES portal by filing Form 13 with the supporting documentation:

• Purchase deed showing original cost of acquisition.

• Valuation report for indexing capital gains.

• Agreement to sell showing the finalized transaction price.

• Tax returns of previous years to verify compliance status.

3. Repatriation of Sale Proceeds (15CA/15CB)

Once the sale is closed and proceeds are deposited in your NRO account, you can repatriate up to USD 1 Million per financial year. This requires a declaration in Form 15CA and a certificate from a Chartered Accountant in Form 15CB.

Conclusion

Filing Form 13 early (usually 30-45 days before registering the sale deed) prevents your funds from being blocked in the tax department for a long time.