I'm an NRI selling a flat in India — do I need Form 13?
The application exists for exactly this situation. On a property sale the default deduction is worked out on the whole sale consideration rather than on your gain, so a flat bought long before you emigrated and sold at a modest profit can have far more taken at closing than the tax you actually owe. Form 13 asks for a certificate authorising deduction at a lower rate, or none, before the money moves. Without one the excess is not lost, but you recover it by filing a return and waiting, rather than receiving the correct amount at closing.
Can a resident Indian apply, or is Form 13 only for non-residents?
It is not restricted to non-residents, but non-residents are the people it matters most to, because the default deduction on money leaving India is set without regard to their costs or their treaty position. Residents more often reach the same result through the no-deduction declarations, which non-residents cannot use at all. If you have moved abroad and are unsure which side of the line you fall on for the year in question, settle that first. The route open to you follows from your residence, not from how much tax you expect to pay.
Who actually applies, the buyer or the seller?
The seller, because it is the seller's income being taxed. The buyer has the separate duty of deducting and remitting, and cannot cure an excessive deduction on your behalf; what a buyer can do is act on a certificate once one exists. That division of roles is why timing matters more than paperwork here. If the certificate is in hand before completion, the buyer deducts at the authorised rate and the transaction closes clean. If it is not, the buyer is obliged to deduct at the default rate and you are left recovering the difference yourself.
We are two joint owners — does each of us apply separately?
In substance, yes. The certificate authorises deduction against a particular payee's income, and joint owners have their own shares, their own acquisition costs and often their own residence positions. One application in one name does not cover the other. This catches families regularly, because a flat held jointly by a couple who left India in different years can produce two different answers on the same sale. Each owner's share of the consideration and each owner's own cost have to be presented, so that the buyer receives an authorisation it can apply to each share.
How early before the sale should the application go in?
Before the buyer pays anything, including any advance or booking amount. The deduction duty attaches to payment, so once an instalment has been remitted at the default rate that slice is already in the system and only a return will recover it. Practically, that means starting while the sale agreement is still being negotiated rather than in the week of completion, because the application has to be supported: title, cost of acquisition, improvement spending and the computation of the gain you say will arise. The purchase documentation is usually the slowest of those to find.
What if the certificate comes through at a higher rate than I asked for?
You are bound by what is authorised rather than by what was requested, and the buyer will deduct at the rate on the certificate. That is not the end of the matter. The authorisation is a view taken before the year is over, and the final position is settled on your return, where the actual gain, your costs and any treaty relief are all brought to account. So a certificate above your own computation leaves a recoverable balance rather than a permanent cost. The lesson is that the computation filed with the application should be the one your documents support.
What does Form W-8BEN actually do?
It tells a US payer that you are not a US person and, where you are entitled, claims the treaty rate on the income they are about to pay you — so withholding comes off at the reduced rate rather than the statutory one. It goes to the payer or the broker, never to the IRS, and it expires, so a stale form is a common cause of over-withholding. Getting it in before payment is the difference between a lower rate and a refund claim. See Form W-8BEN.
Do I pay tax twice on a foreign dividend?
Not at full rates if the relief is claimed. The paying country usually withholds at source, capped by treaty where one applies and the paperwork is in place; your residence country then taxes the dividend and credits the foreign withholding against its own charge. Where the withholding exceeded the treaty rate because no declaration was filed, the excess is recovered from the paying country, not credited at home. See the dividends article.
