TDS on property purchase in Delhi: resident and NRI sellers
A buyer deducts tax at source (TDS) from the price when buying from a resident above a set amount, and under Section 195 when buying from an NRI. Rates, threshold and surcharge change, so confirm them with your CA. An NRI seller can apply for a lower-deduction certificate to reduce the amount withheld.
· By Raghav Chopra, founder, in South Delhi real estate since 2010
Who deducts TDS?
The buyer deducts it from the price and pays it to the government, so the seller receives the price less the TDS. It is a prepayment of the seller's tax, not an extra cost to the buyer.
A buyer who skips the deduction is liable for the tax and for interest, so settle it before the sale deed is registered.
How do you deposit it?
For a resident seller the buyer files Form 26QB and pays the TDS, then gives the seller Form 16B. For an NRI seller the buyer needs a TAN, files the TDS statement and issues the certificate.
Your CA handles the filings, and the deadlines run from the month of deduction.
How is NRI TDS different?
TDS on an NRI seller is at a higher rate than for a resident, plus surcharge and cess, and the buyer must confirm with the CA whether it applies to the whole price or only the gain.
On a Rs 10 Cr sale the difference between those two bases is large, which is why NRIs apply for a lower rate.
Can an NRI seller get a lower deduction certificate?
Yes. The seller can apply to the tax department for a certificate that lets the buyer deduct tax on the actual gain, not the full price. The certificate takes time to obtain, so apply before the sale closes.
Raghav Chopra tells NRI sellers to start the application as soon as the price is agreed.
Resident seller vs NRI seller
| Point | Resident seller | NRI seller |
|---|---|---|
| Rule | Section 194-IA | Section 195 |
| Rate | Set by law; confirm with your CA | Higher than for a resident, plus surcharge and cess; confirm with your CA |
| Applies when | Consideration at or above the statutory threshold | On the sale; no threshold |
| Filing | Form 26QB; certificate in Form 16B | TAN, TDS statement and certificate |
| Lower rate possible | No | Yes, by lower-deduction certificate |
The rates, the threshold and the forms change. Your CA confirms them for your deal.
Frequently asked questions
Do I deduct TDS if I buy from a resident?
Yes, if the consideration is at or above the statutory threshold. You deposit it with Form 26QB and give the seller Form 16B. The deduction is on the higher of the price and the stamp-duty value, so confirm the current rate, the threshold and the base with your CA.
Is TDS an extra cost for the buyer?
No. It is deducted from the price you pay the seller, who claims credit for it against their tax. The buyer's duty is to deduct and deposit it correctly, and to file the forms. Missing the deduction exposes the buyer to tax and interest.
How does an NRI get a lower deduction?
By applying to the income tax department for a lower-deduction certificate before the sale, showing the actual gain. If it is granted, the buyer deducts at the rate in the certificate. Apply early, because the processing takes time and the buyer cannot rely on it after the sale.
Who should file the TDS return for an NRI deal?
The buyer, usually through a CA, because the buyer needs a TAN and must file the statement and issue the certificate. Raghav Chopra coordinates the timing with the CA and the registration date, so the tax is deposited before the money moves.
This is general information, not legal or tax advice. Confirm with your CA or lawyer before acting.
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