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Section 393(2) TDS on NRI Property Sales: What Buyers Withhold

Section 393(2) TDS is withheld on the full sale consideration, not the profit. For a highly appreciated property, that's a very different number than sellers expect.

Not professional advice

This page provides general information only, for the US-India NRI corridor, and is not professional tax, legal, or financial advice. It does not account for your individual circumstances. Rules referenced here can change, and outcomes depend on facts specific to you. Please consult a qualified tax advisor, chartered accountant, or attorney licensed in the relevant jurisdiction before making any decision.

Section 393(2) of the Income-tax Act places the withholding obligation on the buyer, not the seller, whenever the seller is a non-resident. In practice this means: when you sell Indian property as an NRI, the buyer is legally required to deduct TDS before paying you, and hand that amount over to the tax department directly.

The detail that surprises most sellers

Unlike TDS on a resident seller (typically withheld on the sale value under a different, lower-rate provision), Section 393(2) TDS on an NRI seller is calculated on the full sale consideration by default — not on the capital gain. For a property that's appreciated significantly, that produces a TDS figure that can be far larger than the seller's actual tax liability on the gain, simply because the default withholding basis ignores the seller's cost.

Where the rate comes from

The applicable rate depends on whether the gain is long-term or short-term, plus applicable surcharge and cess — or a different, often lower, rate if the seller has obtained a lower/nil TDS certificate under Section 197 in advance. Buyers who skip or underwithhold this TDS can themselves face penalties and interest, which is part of why buyers tend to withhold conservatively (i.e., on the full consideration) absent that certificate.

The Section 393(2) TDS estimator on the Real Estate Capital Gains page estimates the withholding a buyer would apply on a given sale, with or without a certified lower rate, so you can see the gap between what gets withheld and what you may actually owe.

Try the Real Estate Capital Gainscalculators →