NRI Property TDS Rates, the 2026 PAN Change and Exemptions

NRI Property TDS Rates, the 2026 PAN Change and Exemptions

The reference page for how much TDS an NRI property sale attracts, why the surcharge is capped, what changes for buyers from 1 October 2026, and how Sections 54, 54EC and 54F cut the gain — and the TDS with it. Rates are shown under both the Income-tax Act, 1961 and the Income-tax Act, 2025.

Long-term rate
12.5%
no indexation for NRIs
Surcharge
Capped 15%
on s.112 gains
Effective max
14.95%
incl. 4% cess
From 1 Oct 2026
PAN, no TAN
buyer challan route

Effective TDS rate on a long-term gain

The long-term rate is 12.5% of the amount, plus surcharge by slab, plus 4% health and education cess. Because the enhanced 25% and 37% surcharge rates do not apply to Section 112 capital gains, the surcharge is capped at 15% — so the effective rate never crosses 14.95%.

Amount slabBaseSurchargeCessEffective rate
Up to ₹50 lakh12.5%Nil4%13.00%
₹50 lakh – ₹1 crore12.5%10%4%14.30%
₹1 crore – ₹2 crore12.5%15%4%14.95%
Above ₹2 crore12.5%15% (capped)4%14.95%
Without a Lower/Nil certificate this rate applies to the whole sale consideration, not the gain. Short-term gains (property held 24 months or less) are taxed at slab rates; absent a certificate the buyer deducts at about 30% plus surcharge and cess, reconciled on filing. The surcharge slab is set by the amount on which tax is deducted.

Effective-rate finder

Enter an amount to see the long-term effective TDS rate and the surcharge band it falls in.

Surcharge band10%
Long-term effective rate14.30%
TDS on this amount₹14,30,000
This is the long-term rate on the amount shown. Remember: without a certificate it applies to the full sale price, not the gain. Compare with and without a certificate →

The 1 October 2026 change — PAN replaces TAN for buyers

Today, a person buying property from an NRI must obtain a TAN, deduct under Section 195, deposit the tax and file a Form 27Q return — heavier compliance than the resident 1% route. Budget 2026 proposes to remove that friction from 1 October 2026: the buyer will deposit the TDS against their own PAN through a challan-cum-statement, in the style of the resident Form 26QB, with no TAN needed.

Until 30 September 2026

  • Buyer must obtain a TAN
  • Deduct under Section 195, deposit the tax
  • File a Form 27Q TDS return each quarter
  • Issue Form 16A to the seller

From 1 October 2026 (proposed)

  • No TAN — deposit against the buyer’s PAN
  • Pay via a challan-cum-statement, like Form 26QB
  • Simpler one-step compliance for the buyer
  • Rates and the certificate route are unchanged
This is announced and expected to be notified under the Income-tax Rules 2026 — it is the direction of travel, not yet settled law. The rate the buyer deducts, and the seller’s ability to reduce it with a Form 13 / Form 128 certificate, do not change. Confirm the final notification before relying on the PAN route.

Cutting the gain with exemptions

Because a Lower/Nil certificate is issued on the estimated tax, any exemption you legitimately claim reduces the certified rate — and where an exemption covers the whole gain, the certificate can be nil. The three that matter for property are:

Section 54Residential to residential

Reinvest the long-term gain from a residential house into another residential house in India (purchase within one year before or two years after, or construction within three years). The gain, to the extent reinvested, is exempt. A one-time option covers two houses where the gain is up to ₹2 crore.

Section 54ECBonds, up to ₹50 lakh

Invest the gain on land or building in NHAI, REC, PFC or IRFC bonds within six months of sale, capped at ₹50 lakh in a financial year, locked in for five years. Available to NRIs and often the quickest route to a nil or low certificate.

Section 54FAny asset to a house

Reinvest the net sale consideration (not just the gain) of a non-residential long-term asset into one residential house, where you do not own more than one other house. The exemption is proportionate to how much of the consideration you reinvest.

Exemptions have conditions on holding, timelines and reinvestment; getting them wrong can undo the certificate and the return. Model an exemption in the cash-blocked calculator to see its effect on the TDS.

Old Act 1961 vs new Act 2025 — rate and form map

Income-tax Act, 1961 (current filings)

  • TDS on NRI payment: Section 195
  • Lower/nil certificate: Section 197, Form 13
  • TDS return: Form 27Q; certificate: Form 16A
  • LTCG 12.5%; exemptions 54 / 54EC / 54F

Income-tax Act, 2025 + Rules 2026

  • TDS on NRI payment: Section 393
  • Lower/nil certificate: Section 395, Form 128
  • TDS return: Form 140; certificate: Form 131
  • Rates and exemptions carry forward unchanged
The rates and exemption limits are the same across both Acts; only the section and form numbers are renumbered from Tax Year 2026-27 (1 April 2026). Verify the live numbers on the income-tax portal before filing.

Related tools and guides

NRI Lower/Nil TDS certificate hub → Cash-blocked calculator → Form 13 / Form 128 process → NRI selling property — full guide → Capital gains exemptions →

Frequently asked questions

Why is the effective rate 14.95% and not higher above ₹2 crore?
Because the enhanced surcharge rates of 25% and 37% do not apply to capital gains under Section 112. The surcharge on such gains is capped at 15%, so even above ₹2 crore the effective long-term rate is 12.5% plus 15% surcharge plus 4% cess, which is 14.95%.
Does the 1 October 2026 PAN change reduce the tax?
No. It only simplifies the buyer’s compliance — depositing against a PAN instead of obtaining a TAN and filing Form 27Q. The rate deducted and the seller’s ability to reduce it with a Form 13 / Form 128 certificate are unchanged. It is announced and pending final notification under the Income-tax Rules 2026.
Can an NRI use Section 54EC bonds?
Yes. A non-resident can invest the gain on land or building in NHAI, REC, PFC or IRFC bonds within six months, up to ₹50 lakh in a financial year, locked in for five years. It is often the fastest way to bring the estimated tax — and the certificate rate — down to nil or near-nil.
Is the long-term rate 12.5% or 20% for an NRI?
12.5% without indexation. The 20%-with-indexation option for property was restricted to resident individuals and HUFs from 23 July 2024, so it is not available to non-residents. Surcharge is capped at 15% and 4% cess applies.
Does the surcharge apply on the gain or the sale value?
The surcharge slab is determined by the amount on which tax is deducted. Without a certificate that is the full sale consideration; with a certificate it is the gain. This is why a certificate can drop you into a lower surcharge band as well as onto a smaller base.
This page is a general guide for individual taxpayers and is not tax advice. Rates, surcharge, exemptions and their conditions depend on your facts and the law in force for the year. Section and form references to the Income-tax Act, 2025 and the Income-tax Rules 2026 (Section 393, Section 395, Form 128, Form 131, Form 140) apply from Tax Year 2026-27 (1 April 2026); the Income-tax Act, 1961 references apply for FY 2025-26 and earlier. The 1 October 2026 PAN-based buyer process is announced and pending final notification. Verify the current position on the income-tax portal or with your advisor before acting.
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