When the seller is a non-resident, an entirely different tax rule applies to you, the buyer. Miss it, and the tax becomes your liability — not the seller's.
Flat 1% TDS, only if price ≥ ₹50 lakh. No TAN. File Form 26QB. Simple.
TDS on the whole price at capital-gains rates. TAN needed. No threshold — applies from ₹1.
Fail to deduct and the tax + interest is recovered from you.
Seller's residential status decides everything — verify it.
Over-deduction locks the seller's money for months.
Cash payment or wrong account violates FEMA / RBI rules.
Nine steps. The order matters — TAN and the lower-deduction certificate must come before you pay.
Confirm seller's residential status in writing. Collect PAN. Check if the land is rural-agricultural.
The buyer needs a Tax Deduction Account Number to deduct under s.393(2)/195.
Ask the seller to obtain a s.395 certificate so TDS is on the gain, not the full price.
Record price, stamp-duty value, payment schedule and TDS terms. Keep price ≥ stamp value.
Deduct at payment or credit, whichever is earlier — including any advance. Pay to NRO account.
Deposit by challan by the 7th of the next month (for March, by 30 April).
Non-resident TDS return — due 31 Jul / 31 Oct / 31 Jan / 31 May.
Give the seller the certificate from TRACES within 15 days of the return due date.
Register the sale deed; keep challans, certificate and status proof on file.
Status is tested on the date of transfer. It depends on days in India — not on the passport or visa.
Non-resident under s.6. s.393(2)/195 applies — TDS at capital-gains rates on the full price.
s.194-IA — flat 1% if price ≥ ₹50 lakh. Form 26QB, no TAN.
A citizenship status only. If the OCI is non-resident, taxed exactly like an NRI.
Base rate by holding period, then add surcharge by value, then 4% cess. Deduct on the full price unless a certificate says otherwise.
Base 12.5%, no indexation (transfers on/after 23 Jul 2024). NRIs get no grandfathering option.
Base 30% (slab). No 15% surcharge cap on STCG property — it is slab income, not s.111A.
The 24-month line splits the whole regime. Agricultural land has its own rules — sometimes no tax at all.
Not a capital asset. No capital gain, no TDS, no tax. s.195 does not apply. Keep a location/population certificate on file.
Is a capital asset. Capital gains arise → TDS applies (LTCG 12.5% / STCG slab). Exemption under 54B available.
Income-tax is only half the deal. The payment route and the seller's repatriation follow FEMA rules.
An NRI/OCI may freely sell to a resident. No RBI approval needed.
An NRI may sell farm land, plantation or farmhouse only to a resident Indian.
Pay through banking channels only. Cash breaches FEMA & tax law.
Up to USD 1 million per year out of the NRO account, after taxes, with Form 145 & 146 (CA-certified) at remittance.
New form numbers under the Rules, 2026 are shown first; the old, familiar names follow.
Essential. No PAN → 20%/30% TDS and no treaty relief.
The buyer must hold a TAN before the first payment.
s.395. Reduces TDS to the real gain. The single biggest cash-flow saver.
Needed only when claiming DTAA benefit. Filed with PAN.
Due 31 Jul / Oct / Jan / May. Quote any certificate number.
Filed online before repatriating funds abroad.
Chartered Accountant's certificate supporting the remittance.
From TRACES, within 15 days of the return due date (successor to Form 16A).
Only with a Form 128 (s.395) certificate — otherwise, on the full price.
If non-resident, treated exactly like an NRI — s.195 applies.
Still deduct unless a NIL certificate is obtained; seller claims refund.
1% on the resident's share, s.195 on the NRI's share — deduct separately.
No — the credit belongs to the seller, who claims it in the ITR.
Previous owner's cost & holding period (or FMV on 1 Apr 2001).
Pin this up. Everything a buyer must do when the seller is an NRI.
QR placeholder — link to the latest edition when published.
The same rules applied to real-world situations — and what the certificate saves.
Lesson: a Form 128 certificate would have capped TDS at the real ₹2.6L — freeing ₹8.84L for months.
Lesson: never average the two — split by ownership share and deduct under the correct section for each.
Lesson: STCG on property is slab income — the 15% surcharge cap does not apply. Plan the holding period and certificate carefully.
The Income-tax Act, 2025 renumbered everything from 1 April 2026. Same rules — new labels.
Disclaimer. This handbook is published purely for education and general awareness. It is not professional, legal or tax advice and must not be relied upon for any specific transaction. Every case turns on the seller's residential status, the property's character, holding period, cost records and intended reinvestment, and on the law in force on the date of transfer. Always consult a qualified Chartered Accountant before acting.
Ethics note. Firm name, credentials and contact details appear here only as factual information, and this publication is educational content — both expressly permitted under the revised ICAI Code of Ethics (13th Edition, 2026). It carries no solicitation, laudatory or comparative claims, testimonials or promotional offers.
Law stated as on: Tax Year 2026-27 (FY 2026-27), under the Income-tax Act, 2025 (in force 1 April 2026) and Income-tax Rules, 2026, reflecting the capital-gains regime from the Finance (No. 2) Act, 2024. Provisions are subject to change by future Finance Acts, CBDT notifications and judicial rulings.