Because the deduction is applied to the consideration the buyer pays, not to the profit you actually make. The buyer has no way of knowing what the property cost you, so the system takes its cut off the top and leaves the arithmetic to be settled later. On an older flat bought long ago, that routinely holds back far more cash than the sale will ever owe in tax. The gap is not a penalty and it is not lost. It is your money sitting with the department until a return is filed and the position is reconciled.
How much TDS is deducted when an NRI sells property?
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The answer turns on residence, on where the income arose, and on which of the two systems gets to tax it first. Indian residency and deduction at source decide most of these questions before any exemption is considered.
The rule
The answer turns on residence, on where the income arose, and on which of the two systems gets to tax it first. Indian residency and deduction at source decide most of these questions before any exemption is considered.

The exception worth knowing
The exception is the transition year — the year of arrival, departure or the transaction itself — where the general rule is displaced by rules written specifically for the change of status.
Where to go from here
If a letter prompted this, bring the letter — it usually contains the answer to half the questions.
Checked and signed off for the 2025 and 2026 filing seasons by Udit Gupta, International Tax, Cross-Border Tax & Transfer Pricing Expert, Legal Quotient Consultants. General information, not advice for your circumstances — call our 24-hour helpline to discuss your own position.
Files that look like this one
Certificate obtained before the sale agreement was signed
A seller living in Canada was weeks away from signing on a flat in India. Because the deduction runs on the sale consideration rather than the gain, the buyer would otherwise have held back far more than the transaction owed. We prepared the application for a lower deduction, documented the purchase trail and the improvement spending, and answered the queries raised on it. The engagement produced a certificate in the seller's hands before the deed was executed, so the buyer deducted against that figure and no refund claim was needed after closing.
Read how this one runsRefund claimed after a sale that had already completed
The property had been sold and the deduction taken before anyone asked whether it could have been reduced. The remaining work was recovery. We rebuilt the cost of the flat from the original deed and later receipts, computed the gain that actually arose, and filed the Indian return for the year the sale fell into. The engagement produced a filed return carrying the refund claim, a deduction certificate reconciled against it, and a schedule mapping the Indian year onto the seller's Canadian calendar year so the credit side could be prepared at the same time.
Read how this one runsJoint owners each facing their own deduction on one sale
A husband and wife held the property together and assumed one deduction would be made on the sale. The buyer treated each share separately, which meant separate positions, separate applications and separate credits. We worked out the ownership split from the deed and the funding history, prepared an application for each owner on that basis, and set out how the deduction certificates should be issued. The engagement produced two consistent positions rather than one contested one, and a written allocation the couple could hand to their Canadian preparer.
Read how this one runsInherited flat with no purchase papers left in the family
The seller had inherited the property and held nothing from the original purchase. Without a cost history there was no basis on which to argue that the deduction should be lower than the default. We traced the earlier deeds through the registry, gathered the transfer documents and what receipts the family still had for work done on the building, and put the reconstructed cost into the application with the evidence attached. The engagement produced a documented cost position, accepted for the sale, and a file the seller can rely on if it is ever revisited.
Read how this one runsDeduction made but missing from the seller's tax record
The completion statement showed tax withheld, yet nothing appeared against the seller when the return came to be prepared, so there was nothing to claim. We obtained the deposit evidence from the buyer's side, identified where the reporting had gone wrong, and pressed for the correction while the parties were still in contact. The engagement produced a corrected deduction record and a return that could finally be filed with the credit claimed, rather than a refund the seller was entitled to but had no document to support.
Read how this one runsA buyer who deducted as though the seller were resident
The buyer's advocate had treated our client as a resident seller and deducted on that footing, which is a different rule from the one that applies where the seller lives abroad. Both sides were exposed. The seller's record would not support what had been reported, and the shortfall stayed the buyer's responsibility. We established the seller's status from the travel record and the residence evidence, set out what should have been deducted and on what base, and agreed the correction with the buyer before the balance of the price was paid. The engagement produced a corrected deduction and a documented status position for the file.
Read how this one runsAn NRI Selling Indian Property With Tax Withheld on the Price
Withholding on a sale by a non-resident is applied to the sale value rather than to the gain, so it routinely exceeds the tax due. A lower-deduction certificate obtained before completion avoids locking the difference up until a return is assessed.
Read how this one runsMoving Money Out of India and the Certificates It Needs
A remittance out of India needs its tax position certified before the bank will process it. The file establishes the character of the funds, produces the certification, and keeps the position consistent with the returns already filed.
Read how this one runsAll case studies — every published engagement in one place.
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Cross-border tax for sellers shipping worldwide: marketplace withholding, foreign registrations and inventory nexus handled before they become audits.
Marketplaces withhold, remit and report in their own right, so the tax position of a single sale is decided by where the stock sat, where the buyer was and which platform collected — not by where the company is registered. We reconcile the platform's own filings against the returns before either is submitted.
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What people ask us about How much TDS is deducted when an NRI sells property
Yes, and it is the only step that changes what happens at the table. A lower-deduction certificate is applied for ahead of the sale, on the basis of what the gain will actually be, and it tells the buyer to deduct against that figure rather than the default. Obtaining it needs the purchase trail, evidence of improvement spending and the draft agreement, all of which take time to assemble, so the application wants to start while the deal is still being negotiated. Once the deed is signed that route has closed and only a refund claim is left.
Your credit depends on the deduction being deposited and reported against your name, not on the buyer having taken it out of the price. If the reporting never happens, the money has left your hands and the record shows nothing, which is why we ask to see the deposit evidence rather than the completion statement. The correction has to come from the buyer, and it is far easier to obtain while the buyer still wants something from you. Chase it before the keys change hands, and keep the deposit receipt and the deduction certificate with the sale papers.
By filing an Indian return for the year in which the sale falls and claiming the difference as a refund. India's year runs April to March, so a sale in the second half of the calendar year sits in an Indian year that closes after the Canadian one, and the refund usually arrives in a later foreign tax year than the sale itself. That timing matters for the credit you claim at home, because the two systems are being lined up by hand. Expect the Indian filing to be a reconciliation exercise rather than a fresh computation.
What drives the deduction is your residence status at the time of the sale, not the passport you hold or the address printed on the title deed. A buyer dealing with a seller who is outside India deducts on the consideration; a buyer dealing with a resident seller is not in the same position. This is why status has to be settled and evidenced before the agreement is drafted rather than argued about afterwards. If the paperwork shows the wrong status, the deduction follows the paperwork, and the correction turns into a refund claim that takes months.
The deduction itself takes no account of cost at all, which is exactly the difficulty with inherited property: it runs on the price the buyer pays. Cost only enters the picture when the real gain is computed, either in the certificate application before the sale or in the return afterwards. That means finding the original purchase deed, the transfer or probate papers, and receipts for work done over the years, often reaching back a generation. Families rarely have this filed neatly. Reconstructing the trail is usually the longest part of the job, so start it early.
You can, but the two systems classify and tax trusts differently enough that a structure which is efficient in one is often a reporting problem in the other — a Canadian family trust with a US beneficiary, or a US revocable trust holding Canadian property, are the classic pairs. Canada's twenty-one-year deemed disposition, the US grantor rules and each country's reporting have to be read together, before drafting rather than after. See cross-border wills and trusts.
Tax the payer deducts and remits before you receive the money, so collection does not depend on the recipient filing. On cross-border payments — dividends, interest, royalties, rent, pensions, fees for services — it is charged at a statutory rate on the gross amount, which a treaty often reduces. Because it is computed on gross rather than net, the amount withheld frequently exceeds the real tax, and an elective return or refund claim recovers the difference. See withholding review.



