Lower / Nil TDS Certificate for NRI Property Sale

Income-tax Act, 2025 — Lower/Nil TDS Certificate for NRI Property Sale:
Where a non-resident is selling immovable property in India, tax is deductible by the buyer under the Income-tax Act, 2025's non-resident-specific pathway (Form 144, with a Form 131 certificate issued to the seller) rather than the resident Form 141/Schedule B pathway (which replaced the erstwhile Form 26QB under Section 194-IA of the Income-tax Act, 1961, effective 1 April 2026). Because the non-resident pathway is not a flat-rate mechanism in the way the resident 1% TDS under the erstwhile Section 194-IA is, deduction can otherwise be required on the full sale consideration at the rate applicable to the seller's income (historically under Section 195 of the Income-tax Act, 1961), which often substantially exceeds the seller's actual tax liability once the cost of acquisition and exemptions are taken into account.
To avoid this over-deduction, the non-resident seller can apply to the jurisdictional Assessing Officer for a certificate authorising deduction at a lower rate, or nil, based on the seller's actual computed tax liability on the transaction. The long-standing mechanism for this application (historically under Section 197 of the Income-tax Act, 1961) is expected to continue in substance under the Income-tax Act, 2025, though the exact corresponding section number and application form under the new Act have not been independently verified against a first-party source this round and should be confirmed before being cited as a specific provision.

NRI sellers often face high gross-basis withholding unless a lower or nil deduction certificate is obtained. We prepare the capital gains working, supporting tax computation and application pack under the relevant Income-tax Act, 2025 withholding provisions.