How To Avoid 20% TDS On Property Sale By An NRI

Why NRIs lose lakhs to TDS at sale

When an NRI sells Indian property, the buyer must deduct TDS on the full sale price — up to 20% for long-term and up to 30% for short-term holdings. On a ₹2 crore sale, that's up to ₹40 lakh blocked with the Income Tax Department until you file an Indian ITR and claim a refund.

The good news: this can be legally reduced — often by 80–95% — using a Lower Deduction Certificate.

Form 13 — Lower Deduction Certificate

Form 13 is an application under Section 197 of the Income Tax Act for a certificate authorising the buyer to deduct TDS only on the actual capital gain, not on the full sale value. It is filed with the jurisdictional Assessing Officer and typically issued in 3–6 weeks.

On a ₹2 crore sale with a long-term gain of, say, ₹40 lakh, TDS drops from ~₹40 lakh on the sale value to ~₹8 lakh on the gain — a real, legal cashflow swing of ~₹32 lakh.

Section 54 and 54EC — reduce capital gains tax to zero

Section 54: reinvest the long-term capital gain in another Indian residential house within prescribed timelines and capital gains tax can be exempted. Section 54EC: invest up to ₹50 lakh of long-term gain in specified bonds within 6 months. Plan both before sale, not after.

If TDS is already deducted

File your Indian ITR for the year claiming the actual capital gain. Excess TDS is refunded with interest. We typically see refunds credited within 6–9 months when filed cleanly.