Selling Property in India as an NRI: Why PAN and TDS Decide What You Actually Keep

You've agreed a price, the buyer is keen, the paperwork looks routine — and then your accountant in India says the buyer must withhold tax of more than a fifth of the entire sale value, not your profit, before a rupee reaches you. That single sentence is where most NRI property sales come unstuck. If you are searching for how NRI selling property in India, TDS and PAN actually fit together, here is the blunt version: PAN and TDS, not the sale price, decide what you walk away with.

This is not a niche technicality. Whether you inherited a flat in Pune, are clearing your late father's house in Ludhiana, or are cashing out an investment apartment in Bengaluru, the Indian tax system treats a non-resident seller very differently from a resident one — and it is unforgiving about getting the sequence right.

The short answer, near the top#

When an NRI sells property in India, the buyer is legally required to deduct TDS (Tax Deducted at Source) on the gross sale value, not on your capital gain. For a long-term holding (owned more than 24 months), the headline rate is 12.5%, but once surcharge and the 4% health-and-education cess are stacked on, the effective rate climbs to roughly 14.3% to 14.95% on higher-value deals. Sell within 24 months and it is treated as short-term, taxed at your slab rate — effectively 30% plus surcharge and cess.

And the part that catches people cold: if you do not have an Indian PAN, the rate jumps to 20% under Section 206AA, applied to the full sale consideration. No PAN, no lower rate, no exceptions.

Why PAN is genuinely non-negotiable here#

People assume PAN is a "nice to have" for NRIs. In a property sale it is the load-bearing wall.

Without a valid PAN linked to your transaction:

• TDS is deducted at the flat penal rate of 20% under Section 206AA, regardless of your real gain.
• The buyer cannot correctly report the deduction against you, so the tax sits in limbo.
• You cannot file an Indian income-tax return to claim back the excess — and overpaid TDS on a property sale is almost always substantial.
• You cannot apply for a lower-deduction certificate (more on that below), because the entire mechanism is keyed to your PAN.
• You cannot smoothly repatriate the money out of India, because the bank's compliance forms reference your PAN.

In other words, every lever you might pull to keep more of your own money runs through PAN. Sell without one and you have effectively volunteered to overpay, then queue for a refund you may wait a year or more to receive.

If you are an Overseas Citizen of India or a British passport holder of Indian origin and you do not yet hold a PAN — or you hold an old one in a maiden name, or you are unsure whether your existing card is still valid — sorting that before you sign anything is the single highest-value thing you can do.

The lower-deduction certificate: the difference between 14% and what you actually owe#

Here is the relief most NRIs never hear about until it is too late. Because TDS is deducted on the gross sale value rather than your gain, the tax withheld is routinely far more than your true liability — sometimes when there is no taxable gain at all.

The remedy is a lower- or nil-deduction certificate under Section 197 (Income-tax Act), applied for using Form 13 on the TRACES portal. The Jurisdictional Assessing Officer reviews your actual numbers — purchase cost, holding period, any reinvestment exemptions — and issues a certificate instructing the buyer to deduct TDS only on the real gain rather than the full price.

The catch is timing and process:

• The certificate must be in hand before the buyer pays you any substantial sum. Once TDS has been deducted at the full rate, the only route left is filing a return and waiting for a refund.
• Departmental processing typically takes 30 to 45 days, and officers frequently raise queries that reset the clock.
• A truly "nil" certificate is rare in practice; many commissionerates issue a small minimum rate even where you can show a capital loss.

Scenario	TDS withheld at sale	What you reclaim later
No PAN	20% of full sale price	Cannot file to reclaim until PAN obtained
long delay
With PAN, no certificate	~12.5–14.95% of full sale price	File ITR, claim refund of excess over actual gain (months)
With PAN + Section 197 certificate	Only the tax on your real gain	Little or nothing to reclaim — you keep your money upfront

Short-term versus long-term: the holding-period trap#

The 24-month line matters enormously, and inheritance makes it counter-intuitive.

• Held more than 24 months → long-term, taxed at 12.5% (plus surcharge and cess).
• Held 24 months or less → short-term, taxed at your slab rate — which for a non-resident on a large gain can mean an effective rate north of 30%.

For inherited property, the good news is that you inherit the original owner's holding period and cost of acquisition. A house your parents bought in 1995 does not become "short-term" because you only received it last year — it remains long-term, and the gain is calculated from the original (or indexed, where applicable) cost. Getting this wrong — and letting the buyer treat it as a fresh short-term holding — can needlessly triple the tax withheld.

Getting the money out: repatriation is its own hurdle#

Selling is only half the job. Moving the proceeds to the UK has its own rulebook under FEMA and RBI.

• Sale proceeds must first land in your NRO account in India — this is mandatory.
• From there, an NRI may repatriate up to USD 1 million per financial year (April–March) across all NRO remittances, without needing case-by-case RBI approval.
• Each remittance requires Form 15CA (your declaration) and, in most cases, Form 15CB — a certificate from a chartered accountant confirming the correct Indian tax has been paid on the funds.
• Exceed USD 1 million in a year and you either spread repatriation across financial years or seek specific RBI permission.

Every one of those forms is keyed to your PAN and to clean TDS records. If the TDS was deducted incorrectly, or under no PAN, the bank's compliance team can — and routinely does — freeze the outward transfer until it is resolved.

What changes on 1 October 2026#

Worth knowing, because it shifts the burden. Until now, a buyer purchasing from an NRI had to obtain a separate TAN to deposit the TDS. From 1 October 2026, that requirement is removed — buyers can deduct and deposit the TDS using a PAN-based challan, the same simplified mechanism used for resident-to-resident sales.

This is genuinely good news for sellers: it removes a common reason buyers stall or get the deposit wrong. But note what it does not change — the seller's PAN is still mandatory, and the lower-deduction certificate is still the only way to avoid over-withholding upfront.

Where it goes wrong — and why it is rarely a small problem#

The recurring, expensive mistakes we see:

• Selling with no PAN, or a stale PAN in an old name. Result: 20% locked up, a refund queue, and a stalled repatriation.
• Treating it like a resident sale (1% TDS). The buyer under-deducts, the department issues a demand, and the transaction unwinds in disputes.
• Skipping the Section 197 certificate because nobody mentioned it — then discovering a fifth of the sale price is gone and the refund won't arrive until the next assessment year.
• Mishandling inherited-property cost and holding period, inflating the deemed gain.
• Filing 15CA/15CB incorrectly, so the bank refuses the transfer and the money is stuck in the NRO account.

None of these are recoverable with a quick phone call. They are weeks or months of correspondence with an Assessing Officer from another time zone, often while a buyer's patience — and the deal — evaporates.

Most NRIs come to a property sale through inheritance or a one-off decision to exit an Indian asset — it is not something you do often enough to know the traps. The piece that is entirely within your control, and that everything else depends on, is having a correct, valid PAN in place before the sale moves. That is the foundation we help put right.

Frequently asked questions#

Can I sell my property in India without a PAN?#

Practically, no — not without serious cost. A sale can technically complete, but TDS will be deducted at 20% of the full sale price under Section 206AA, you cannot apply for a lower-deduction certificate, you cannot file to reclaim the excess, and your bank will struggle to repatriate the funds. A valid PAN must be in place first.

How much TDS is deducted when an NRI sells property?#

For a long-term holding (owned more than 24 months), TDS is 12.5% of the gross sale value, rising to roughly 14.3%–14.95% with surcharge and cess on higher-value sales. Short-term holdings are taxed at slab rates — effectively 30%-plus. Crucially, it is deducted on the sale price, not your profit, unless you obtain a Section 197 certificate.

What is a lower-deduction (Section 197 / Form 13) certificate?#

It is a certificate from the Indian tax authorities instructing the buyer to deduct TDS only on your actual capital gain rather than the full sale value. You apply via Form 13 on the TRACES portal; it typically takes 30–45 days and must be issued before the buyer pays you. It is the main legitimate way to avoid having far too much tax withheld.

How much money can I repatriate after selling property in India?#

An NRI can repatriate up to USD 1 million per financial year from an NRO account without RBI approval, covering property-sale proceeds and other NRO remittances. Each transfer needs Form 15CA and usually a chartered accountant's Form 15CB confirming taxes are paid. Larger amounts can be spread across financial years.

I inherited the property — is the gain short-term or long-term?#

You inherit the original owner's holding period and cost of acquisition, so a long-held family property remains long-term even if you only recently received it. This usually means the lower 12.5% long-term rate applies rather than the much higher short-term slab rate — provided it is calculated correctly.