NRI Lower / Nil TDS Certificate on Property Sale — Form 13 (Form 128), Section 197 (Section 395)
When an NRI sells property in India, the buyer must deduct TDS on the full sale value — often ₹13–15 lakh on a ₹1 crore sale, even when the real tax is a fraction of it. A Lower or Nil TDS certificate restricts the deduction to the actual gain, freeing up the surplus that would otherwise sit blocked for a year or more. This is your complete guide: how it works, what it saves, and how to apply on Form 13 (Form 128 from Tax Year 2026-27) under Section 197 (Section 395).
See what a certificate saves you
Enter your sale figures below. The calculator shows the TDS a buyer must withhold on the full sale value versus the far smaller deduction a Lower/Nil certificate allows on your actual gain — and the cash you free up.
Cash-Blocked vs Certificate-Saving Calculator
Long-term (held over 24 months) is taxed at 12.5%; short-term at slab rates.
Without a certificate
Buyer deducts on the full sale value
With a Lower/Nil certificate
Deduction restricted to the actual gain
What the Lower/Nil TDS certificate is
A Lower or Nil TDS certificate is an order from the Assessing Officer telling the buyer to deduct tax at a reduced rate — or not at all — instead of on the full sale value. For an NRI seller the default deduction is under Section 195 (renumbered Section 393 from Tax Year 2026-27) on the whole consideration at the capital-gains rate, from the first rupee, with no ₹50 lakh threshold and no 1% concession. The certificate is applied for under Section 197 (renumbered Section 395) on Form 13 (renumbered Form 128 under Rule 213), and it aligns the TDS to your real tax so lakhs are not needlessly locked up.
How to get the certificate — the process
Register on TRACES and prepare your figures
The NRI seller registers on the TRACES portal and computes the estimated capital gain — cost, improvement, transfer expenses and any Section 54 / 54EC / 54F exemption planned.
File Form 13 (Form 128 from TY 2026-27) online
Submit the application electronically with sale agreement, cost proof, computation and PAN details, addressed to the International Taxation Assessing Officer with jurisdiction over the NRI.
Respond to the officer’s queries
The AO reviews the computation and may raise questions. A clean, well-documented application moves faster — typically 3 to 6 weeks.
Hand the certificate to the buyer
Once issued, the buyer deducts at the certified lower or nil rate and reports it. Apply before the sale closes so the deduction is right the first time and no refund wait arises.
Effective TDS rate on a long-term gain
| Gain / amount slab | Base | Surcharge | + 4% cess | Effective |
|---|---|---|---|---|
| Up to ₹50 lakh | 12.5% | Nil | Yes | 13.00% |
| ₹50 lakh – ₹1 crore | 12.5% | 10% | Yes | 14.30% |
| ₹1 crore – ₹2 crore | 12.5% | 15% | Yes | 14.95% |
| Above ₹2 crore | 12.5% | 15% (capped) | Yes | 14.95% |
Reduce the gain — and the TDS — with exemptions
The certificate is issued on your estimated tax, so any exemption you legitimately plan to claim lowers the certified rate. The main routes for property are Section 54 (reinvest a residential gain in another house), Section 54EC (invest up to ₹50 lakh of the gain in NHAI/REC/PFC/IRFC bonds within six months) and Section 54F (reinvest the net sale consideration of a non-residential asset in a house). Where an exemption fully covers the gain, the estimated tax is nil — and the officer can issue a nil certificate. Model this by entering the exemption amount in the calculator above.
Old Act 1961 vs new Act 2025 — the numbers
Income-tax Act, 1961 (current filings)
- Certificate: Section 197
- Application: Form 13
- TDS on NRI payment: Section 195
- TDS return: Form 27Q; certificate: Form 16A
- Applies for FY 2025-26 (AY 2026-27) and earlier
Income-tax Act, 2025 + Rules 2026
- Certificate: Section 395 (395(1) lower / nil)
- Application: Form 128 (Rule 213)
- TDS on NRI payment: Section 393
- TDS return: Form 140 (reported); certificate: Form 131
- Applies from Tax Year 2026-27 (1 April 2026)