Do I need a TAN to buy property from an NRI?

You must deduct TDS on the entire sale price (not just the profit) at 20% if the NRI held the property over 24 months, or up to 30% if held for less, plus surcharge and cess - and this applies no matter how small the deal is, unlike the simpler 1% rule for resident sellers. Applies under Section 195, not the simpler Section 194-IA used for resident sellers Long-term (held over 24 months): 20% TDS plus applicable surcharge and cess, on the full sale value Short-term (held 24 months or less): TDS at slab rate up to 30% plus surcharge/cess Buyer needs a TAN (not just PAN) to deduct and deposit this TDS, and must file Form 27Q The NRI seller can apply for a lower/nil TDS certificate under Section 197 to reduce this

CAPGAIN › Answers › NRI, FEMA, home loans & IBC › What TDS Rate Applies When Buying a Flat From an NRI Seller?

What TDS Rate Applies When Buying a Flat From an NRI Seller?

Short answer: You must deduct TDS on the entire sale price (not just the profit) at 20% if the NRI held the property over 24 months, or up to 30% if held for less, plus surcharge and cess - and this applies no matter how small the deal is, unlike the simpler 1% rule for resident sellers.

Law: Section 195, Income-tax Act 1961 · Authority: CBDT · Status: in force (effective 1 Apr 1961) · Checked 25 Sept 2026

What you need to know

Applies under Section 195, not the simpler Section 194-IA used for resident sellers
Long-term (held over 24 months): 20% TDS plus applicable surcharge and cess, on the full sale value
Short-term (held 24 months or less): TDS at slab rate up to 30% plus surcharge/cess
Buyer needs a TAN (not just PAN) to deduct and deposit this TDS, and must file Form 27Q
The NRI seller can apply for a lower/nil TDS certificate under Section 197 to reduce this

Who this applies to: buyers/NRIs/CAs

Official / primary source: incometaxindia.gov.in (government source)

The law behind it

TDS on Sale of Property by an NRI - Section 195

When anyone buys property from an NRI seller, the buyer must deduct TDS on the full sale price (not just the profit) before paying - 20% for long-term gains and up to 30% for short-term gains, plus surcharge and cess. This applies at every price point, unlike the simpler 1% TDS rule for resident sellers.

Section 195, Income-tax Act 1961 · in force · source

Form 27Q - quarterly TDS statement for payments to non-residents/NRIs

When a buyer purchases property from an NRI seller, TDS must be deducted under Section 195 at a much higher rate than the usual 1% (based on the NRI's actual capital gain and slab, unless a lower-TDS certificate applies), and reported quarterly on Form 27Q rather than Form 26QB. This is one of the most commonly missed compliance steps in NRI property deals.

Form 27Q (Section 195); renumbered Form 144 under Income-tax Act 2025 · amended · source

Work out your own numbers

CAPGAIN's free calculators cover capital gains (12.5% and 20%-indexed side by side), TDS on property, stamp duty and registration by state, home-loan EMI and prepayment.

Open the CAPGAIN calculators