When an NRI sells property in India, the buyer must deduct TDS under Section 195 — and the rules are very different from the 1% most resident sellers know.
Section 195, not 194-IA
For a resident seller, the buyer deducts 1% under Section 194-IA. For an NRI seller, Section 195 applies instead: TDS on long-term gains at 12.5% (plus surcharge and cess), and on short-term gains at slab rates — deducted, by default, on the full sale consideration, not just the gain.
The lower-deduction certificate
Because default TDS usually far exceeds the actual tax on the gain, the seller should apply to the jurisdictional Assessing Officer for a certificate under Section 197 before the sale. With it, the buyer deducts only the tax attributable to the computed gain — often the difference between months of blocked refund and clean cash at closing.
Repatriating the proceeds
Moving sale proceeds abroad needs Forms 15CA/15CB, banking through the NRO account, and staying within the USD 1 million per financial year remittance route.