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NRI property sellers facing heavy TDS delays
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Simplifying TDS procedures would ease genuine property transactions, free up blocked funds, and make India’s tax system more NRI-friendly without compromising revenue interests
PRAVASISAMWAD.COM
Non-resident Indians (NRIs) selling property in India often face serious cash flow problems due to complex tax deduction rules. Current regulations can block a large portion of sale proceeds for months, sometimes even years, leaving sellers unable to reinvest or plan their finances smoothly. A Deloitte pre-Budget report highlights that between 12.5 per cent and 31.2 per cent of an NRI seller’s funds can remain stuck with the tax department because of high Tax Deducted at Source (TDS) and procedural delays.
For resident sellers, property transactions are relatively simple. Buyers deduct 1 per cent TDS on properties valued at ₹50 lakh or more and deposit it using a single online form. However, when the seller is an NRI, the transaction falls under stricter rules.
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Buyers must deduct tax at higher rates linked to capital gains, obtain a Tax Deduction Account Number (TAN), deposit the tax separately, and file quarterly TDS returns
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This makes the process cumbersome, especially for individual buyers who may never deal with TDS again
Experts point out that this system discourages buyers from purchasing property from NRIs and creates unnecessary stress for sellers, many of whom may not even have a final tax liability in India. While the law allows NRIs to apply for a lower or nil TDS certificate, the process is time-consuming and requires detailed documentation. Delays in getting approvals can even lead to missed property deals.
Both tax professionals and industry bodies believe Budget 2026 should address these issues. One key suggestion is to introduce a simplified challan-cum-statement system for NRI transactions, similar to what exists for resident sellers. This would reduce compliance pressure on buyers while ensuring proper tax collection.:
