You Sold Your Flat in India. Why Is the Buyer Holding Back So Much Money?

"Why is he keeping ₹13 lakh of my money?"

Priya lives in Melbourne. In 2015, she bought a two-bedroom flat in Hyderabad for ₹42 lakh. This year, a young couple offered ₹90 lakh for it, and she happily agreed.

On the day of registration, the buyer's CA handed her a calculation. Out of ₹90 lakh, the buyer would pay her about ₹77 lakh and deposit nearly ₹13 lakh with the tax department in her name.

Priya was upset. "My profit is ₹48 lakh. How can the tax be ₹13 lakh?"

She was right to be suspicious, but the buyer wasn't cheating her. He was following a rule that catches most NRI sellers by surprise.

The buyer taxes your whole price, not your profit

When a resident sells property, the buyer deducts just 1% as TDS. When an NRI sells, the law makes the buyer deduct tax at the full capital gains rate, and by default on the entire sale price, because the buyer has no way of knowing your actual profit.

For property held more than two years, that rate is 12.5%, plus surcharge and cess. For property held two years or less, it is your slab rate, which can be up to 30% plus extras.

Priya's numbers

Approximate figures for illustration. NRIs pay 12.5% on long-term gains without the inflation adjustment (indexation). Brokerage and improvement costs can lower the gain further.

Priya will get the extra ₹6.6 lakh back, but only after filing her Indian tax return and waiting for the refund. That can take many months.

The fix: a lower-TDS certificate

Before the sale, you can apply online to the income tax department for a lower or nil TDS certificate. You show your purchase cost and expected profit, and the department tells the buyer to deduct tax only on your real gain. The buyer then holds back about ₹6 lakh, not ₹13 lakh.

It takes a few weeks, so apply as soon as you agree on a price. Add a clause to the sale agreement saying the buyer will deduct at the certificate rate once it's issued.

What changed in October 2026

Until 30 September 2026, a buyer purchasing from an NRI had to first get a special tax number called a TAN, which often delayed deals. From 1 October 2026, a resident individual buyer can deposit this TDS using just their PAN. That's one less excuse for a buyer to back out or ask for a lower price.

Taking the money abroad

The sale money goes into your NRO account. You can send up to $1 million per financial year from NRO accounts abroad, with a short form and a certificate from a chartered accountant showing that taxes are settled. The bank won't release it without them.

The solution: plan the sale in four steps, not one

Priya's sale had already closed, so she filed her return and is waiting for her refund. Her sister, who is selling a plot in Nashik next year, is doing it in the right order:

1. When you list the property: gather the purchase deed, payment receipts, and bills for any major improvements. Together they prove your cost.
2. When you agree on a price: apply for the lower-TDS certificate and add the TDS clause to the agreement.
3. At registration: collect proof of the TDS deposit from the buyer (Form 16A). Check that it shows up against your PAN on the tax portal.
4. After the sale: file your Indian tax return to settle the final tax and claim any refund, then get the CA certificate to send money abroad.

Worth asking your CA about

• Reinvesting the gain in another home in India, or in specified bonds, can reduce or remove the tax
• How your country of residence (Australia, in Priya's case) taxes the same sale, and how to claim credit for tax paid in India
• If the property was inherited, which purchase cost and date apply

The 30-second takeaway

As an NRI seller, the buyer holds back tax on your whole price, not your profit. Get a lower-TDS certificate before the sale, or wait months for a refund after it.