TDS on Property Purchase: 1% for Residents, 20%+ for NRI Sellers
The buyer, not the seller, is liable for deducting and depositing TDS. Get it wrong on an NRI transaction and the buyer carries the shortfall, plus interest and penalty.
Resident seller (194-IA)
1%
NRI seller (195, LTCG)
20%+
194-IA threshold
₹50 L
Form 26QB deadline
30 days
What the data says
Section 194-IA: 1% on consideration of ₹50 lakh or more where the seller is resident; deposited via Form 26QB.
Section 195: where the seller is an NRI, TDS is deducted on the capital gain at the applicable rate plus surcharge and cess, requiring TAN and Form 27Q.
A Section 197 lower-deduction certificate can cut the NRI withholding to the actual tax liability.
How EstateVeda executes this
Seller residency determination and documentation before the first payment.
TAN registration for the buyer where Section 195 applies.
Section 197 certificate application on the seller side, filed early — processing takes weeks.
Form 26QB / 27Q filing and Form 16B / 16A issuance within statutory deadlines.
Risks we underwrite against
Deducting 1% on an NRI seller — the single most expensive error in Indian conveyancing.
Late Form 26QB filing attracting ₹200/day under Section 234E.
Splitting payments across co-buyers without splitting the TDS filings correctly.
EstateVeda verdict
Confirm seller residency in writing, and never release the final tranche before TDS is deposited and the certificate issued.
Frequently asked questions
What is the TDS rate on buying property from an NRI?
TDS is deducted under Section 195 on the capital gain — effectively 20%+ including surcharge and cess for long-term gains, unless the seller produces a Section 197 lower-deduction certificate.
When is 1% TDS applicable?
Under Section 194-IA, on purchase of immovable property worth ₹50 lakh or more from a resident seller.
Who is responsible for depositing TDS?
The buyer. Failure to deduct or deposit makes the buyer liable for the tax, interest and penalty.