Selling Property in Hyderabad as an NRI: TDS, Lower Deduction Certificate and Repatriation

Say you work in Dallas and own a flat in Kokapet that you bought in 2019. A buyer has agreed a price, the sale deed date is fixed, and then the buyer's advisor says he must hold back a large slice of the price as tax. Nobody told you that the slice can be calculated on the whole price, not just your profit. This guide explains how to avoid that surprise.

Short answer. When an NRI sells property in India, the buyer must deduct tax at source (TDS) before paying the seller. For a long-term gain the rate is 12.5% plus surcharge and cess, but unless a certificate limits it, the deduction is commonly made on the full sale price rather than only the gain. A lower or nil deduction certificate (Form 128) obtained before the sale can cut the deduction to the real tax; the money can then leave India through the NRO account, up to USD 1 million per financial year, with Forms 145 and 146 (earlier 15CA and 15CB).

Which law applies: the 1961 Act or the Income-tax Act, 2025

The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026, and the tax year replaces the assessment year. For a sale where the TDS payment falls in tax year 2026-27 you work under the 2025 Act; for earlier payments the 1961 Act continues. Where a deal straddles 1 April 2026 (agreement earlier, payment later), check the transitional rules before relying on either column (confirm).

Topic	Income-tax Act, 1961	Income-tax Act, 2025
TDS on payment to a non-resident	Section 195	Section 393(2), Table Sl. No. 17 ("rates in force")
Tax rate on long-term capital gain	Section 112 (confirm)	Section 197(1)(b): 12.5%
Lower or nil deduction certificate (seller applies)	Section 197, Form 13	Section 395(1), Form 128
Determining the taxable proportion (buyer applies)	Section 195(2)	Section 395(2), Form 129, Rule 214
Remittance information	Section 195(6), Forms 15CA and 15CB	Section 397(3)(d), Forms 145 and 146, Rule 220

A buyer buying from a resident seller deducts a much smaller 1% under a separate rule (see our guide to buying a flat in Hyderabad). That rule is for resident sellers; a non-resident seller falls under the non-resident provision above. For the background on the new Act, see our note on the Income-tax Act, 2025 and the tax year.

How much TDS applies when an NRI sells property

The rates

Section 393(2) of the 2025 Act does not carry a fixed property rate for this payment; it says tax is deducted at "rates in force", so the rate is the rate at which the gain itself is taxed.

• Long-term gain: 12.5%, under section 197(1)(b). Land or a building generally becomes long-term after 24 months of holding (confirm the 2025 Act section).
• Short-term gain: taxed at the seller's normal rates, so withholding can be much higher. Confirm the rate before the sale; see our FY 2026-27 slab note for the slabs.
• Add-ons: surcharge (depends on the amount) and 4% health and education cess are added on top (confirm for tax year 2026-27).

The indexation trap

Some sellers have heard that property bought before 23 July 2024 can be taxed at 20% with indexation, if that gives a lower tax. Section 197(3) of the 2025 Act gives that relief only to an individual or HUF "being a resident". An NRI seller does not qualify, so budgeting on the 20%-with-indexation figure would be a mistake.

On what amount is it deducted

The statute taxes the gain, but a buyer rarely knows the seller's cost of acquisition. In practice, buyers and banks deduct on the entire sale consideration unless a certificate says otherwise. That practice is not written into the section; it is the cautious route a buyer takes to protect himself. The next sections show how to avoid over-deduction.

Getting a lower or nil deduction certificate (Form 128)

A seller who expects a small gain, has reinvestment relief, or has losses can ask the Income Tax Department for a certificate permitting a lower rate or no deduction. The certificate procedure under section 395(1) is on the Income Tax Department's pages:

1. Check eligibility and PAN. The form cannot be submitted without a PAN. The seller applies (the payee).
2. Prepare the numbers. The FAQs ask for a computation of estimated total income and tax liability for the tax year, and income details for any of the preceding four tax years for which no return was filed. For a property sale, our team also builds the capital gains computation with cost, improvement and transfer expenses (this part is practice, not a stated requirement).
3. File Form 128 online on TRACES (the portal, www.tdscpc.gov.in): log in, choose File Forms, select Form 128, fill it, upload documents, e-verify and submit. There is no offline filing. You receive an acknowledgment number.
4. Do this before the transaction. The FAQs state that an application cannot be processed once the transaction involving the TDS is completed.
5. Hand the certificate to the buyer. The buyer checks it on TRACES and must deduct at the certified rate for the period named on it. The Assessing Officer can later cancel a certificate after giving the applicant a reasonable opportunity (section 395(5)).

The department's pages do not state a processing time, so do not fix a sale date around an assumed turnaround; leave buffer and treat the timeline as (confirm). Approval is at the department's discretion and nothing here promises a lower rate.

There is a second route. If the buyer believes only part of the payment is taxable, the buyer can apply on Form 129 under section 395(2) for the Assessing Officer to determine the taxable proportion (Rule 214). It is less common for property sales, and as the buyer applies it, the buyer must be willing to take it up (confirm).

Worked example (illustrative figures, not advice)

Assumptions: a Kokapet flat held more than 24 months, sold in tax year 2026-27 for ₹1,50,00,000 and bought for ₹60,00,000; gain taken as ₹90,00,000 (no improvement cost, no transfer expenses, no exemption); 12.5% rate; 4% cess; surcharge ignored to keep the arithmetic clear. Real figures will differ.

Item	No certificate (on full price)	With certificate (on gain)
Base for TDS	₹1,50,00,000	₹90,00,000
Tax at 12.5%	₹18,75,000	₹11,25,000
Cess at 4%	₹75,000	₹45,000
TDS withheld	₹19,50,000	₹11,70,000

The difference of ₹7,80,000 is not lost tax, but without a certificate it stays with the department until the seller files a return and claims a refund. On the other hand, the seller must still file an Indian return, and the final tax depends on actual figures.

Form 145 and Form 146 (formerly 15CA and 15CB)

Before money goes abroad, the bank (authorised dealer) needs tax-compliance papers. Under Rule 220 of the Income-tax Rules, 2026, Form 145 replaces Form 15CA and Form 146 replaces Form 15CB.

• Part A: remittances that are chargeable to tax and total up to ₹5,00,000 in the tax year.
• Part B: above ₹5,00,000, with an Assessing Officer certificate under section 395(1) or (2).
• Part C: above ₹5,00,000, with a Chartered Accountant's certificate on Form 146. The remitter first assigns the CA on the portal.
• Part D: remittances that are not chargeable to tax.

Form 146 now has a table for capital gains remittances (sale date, consideration and acquisition date) and a mandatory UDIN (a unique document identification number) for the accountant. A property-sale remittance will normally sit in Part B or Part C. Banks may ask for extra papers beyond the forms, so check with your bank's NRI desk (confirm).

Repatriation: NRO, NRE and the USD 1 million limit

Under the RBI's Master Direction on Remittance of Assets (updated as on 29 June 2026), an NRI or PIO (person of Indian origin) may remit up to USD 1 million per financial year, with documentary evidence, out of NRO balances, sale proceeds of assets or inherited assets. Transfers to NRE and SNRR accounts count within the same limit.

• The bank must obtain an undertaking that NRO funds are the remitter's own legitimate receivables, not borrowed and not moved from another NRO account.
• If you remit in instalments, all of them go through the same bank.
• Above USD 1 million in a year needs prior RBI approval.
• The remittance is subject to payment of applicable Indian taxes; the RBI does not issue tax instructions.

The Master Direction text I read does not carry a separate cap on the number of properties or a lock-in period, though older circulars did; confirm with your bank. Also confirm the rules for money already sitting in NRE or FCNR(B) accounts, which are governed separately and which this guide has not reviewed.

Common mistakes

• Applying for Form 128 after the registration date. The department says it cannot process it once the transaction is complete.
• Assuming the resident-style indexation relief applies to an NRI.
• Deducting TDS but not depositing it, or depositing it under the buyer's PAN alone without the seller's PAN, so that the seller cannot see credit in Form 26AS or the annual tax statement (confirm form names under the 2025 Act).
• Forgetting that the buyer needs a TAN (tax deduction account number) to deduct on a payment to a non-resident (confirm section under the 2025 Act).
• Planning to repatriate before filing the Indian return and clearing the Form 145 and 146 steps.
• Mixing a joint sale. Where the NRI co-owns with a resident, each seller's share and status matters.

Hyderabad context: Kokapet, Financial District, Nanakramguda and Kothaguda

These areas around the Gachibowli IT corridor have many apartments and plots owned by people working abroad, which is why NRI sale paperwork is a recurring need there. Sales are usually registered with the sub-registrar, and the buyer's TDS challan and the seller's certificate should be ready before the registration appointment. If you live overseas, a general or special power of attorney holder or a family member can run the process, but the NRI remains the taxpayer. The sale should also be checked for the plot classification (agricultural land has a different FEMA position) (confirm).

Why work with ComplianceKart

Think of a multi-speciality hospital: the cardiologist, the radiologist and the surgeon work from one care plan instead of sending you from clinic to clinic. ComplianceKart works similarly. We are a boutique practice bringing CAs, CSs and advocates under one roof, so the capital gains computation, the Form 128 application, the Form 146 certificate and the sale documents are coordinated, not scattered. Our broader NRI taxation in India guide covers residential status and DTAA basics, and you can read about ComplianceKart.

Selling property from abroad? Message us on WhatsApp (confirm), email team@compliancekart.com or call 9959536391. Please do not send PAN or bank details in the first message. Outcomes such as a lower rate depend on the department's decision and are not guaranteed.

FAQs

1. Who deducts TDS when an NRI sells a flat in Hyderabad? The buyer, whether an individual or company, deducts at the time of payment or credit, whichever is earlier, under section 393(2) (section 195 earlier). The timing detail is part of the 2025 Act table notes (confirm).

2. Can the buyer deduct only on my profit? Legally the tax relates to the gain. In practice the buyer deducts on the full price unless you hold a Form 128 certificate or the buyer obtains a determination under section 395(2).

3. How long is a lower deduction certificate valid? For the period stated on it. The department's pages do not give a standard period, and the certificate applies to the deductors named in it (confirm).

4. How much can I send abroad from the NRO account? Up to USD 1 million per financial year under the RBI's Master Direction, with documents, and with taxes paid. More needs RBI approval.

5. Do 15CA and 15CB still exist? For the 2025 Act regime the forms are now Form 145 and Form 146 under Rule 220. Banks and older checklists may still use the old names.

6. Do I still have to file a return in India after TDS? Yes, if there is tax or refund to settle. The sale gain is reported in the Indian return, and the TDS is claimed as credit. Confirm the due date for tax year 2026-27.

Sources

• Income Tax Department: Section 393, Income-tax Act, 2025
• Section 395
• Section 197
• Form 128 FAQs and Form 128
• Rule 214 and Rule 220
• Form 145 and Form 146
• RBI Master Direction on Remittance of Assets

Conclusion

For an NRI property seller the order of work matters: settle the Act and rate, get the Form 128 certificate before registration, keep the Form 145 and 146 papers ready, and then move funds from the NRO account within the USD 1 million limit. This article is general information as of 7 November 2026 and not professional advice for your sale.