TDS when buying property from an NRI seller
When a buyer purchases Indian property from a non-resident seller, the resident-property shortcut form and rate may not apply. The buyer should identify the seller's tax status, obtain the required tax account registration and deduct under the non-resident provisions.
Seller status changes buyer compliance
Confirm non-resident status before payment. The buyer should obtain professional help for TAN, the applicable rate, deposit and TDS return rather than using the resident-seller workflow.
Key points
- Buyer obligation — The buyer is responsible for correct deduction and reporting.
- Rate needs review — Gain type, surcharge and a lower-deduction certificate can change withholding.
- TDS versus tax — The seller reconciles withholding against final capital-gains liability.
Before the first payment
Verify residential status, PAN, ownership documents and payment schedule. Obtain advice before any advance or instalment because withholding can be triggered on payment or credit.
A lower- or nil-deduction certificate, when available and valid, should be checked before applying a reduced amount.
Transaction records
Sale agreement and payment schedule.
TAN, challans and TDS return acknowledgements.
Certificate issued to the seller and final tax computation.
Frequently asked questions
Can the buyer use Form 26QB for an NRI seller?
The resident-property process is not the normal route for payment to a non-resident. Obtain current professional guidance.
Is TDS calculated only on the gain?
Withholding mechanics and final capital-gains computation differ. A lower-deduction certificate may help align them.
Who pays penalties for short deduction?
The buyer can face interest and compliance consequences for incorrect deduction or deposit.