Start with the seller’s residence and the payment date
Establish each seller’s residence for Indian income tax purposes for the relevant period. Citizenship, an overseas address and an NRO account do not determine it on their own. Identify when each payment is credited or paid; registration is not the only point at which withholding may arise.
| Payment period | Resident seller | Non-resident seller |
|---|---|---|
| Under the 1961 Act, before 1 April 2026 | Section 194-IA: 1% of the higher of consideration and stamp duty value for a covered sale, unless both are below ₹50 lakh. Apply the statutory exclusions and aggregate multiple transferors or transferees for transactions from 1 October 2024. PAN-based Form 26QB. | Section 195 applies to a sum chargeable under the Act at the rates in force. The payer may seek determination of the chargeable proportion under section 195(2); the payee may seek a lower or nil certificate under section 197 in Form 13. The regular buyer route generally used TAN, Form 27Q and Form 16A. |
| 1 April to 30 September 2026 | Section 393(1), table serial no. 3(i); Form 141 Schedule B for covered transfers. | Section 393(2), table serial no. 17. Seller application under section 395(1) in Form 128. The regular TAN reporting route used Form 144. |
| From 1 October 2026 | Section 393(1), table serial no. 3(i); Form 141 Schedule B for covered transfers. | A resident individual or HUF buying from a non-resident uses the PAN-based Form 141 Schedule E where required and does not need TAN for that transaction. Check the regular TAN route for buyers outside the exception. The seller can still seek a certificate under section 395(1); section 395(2) provides the payer’s chargeable proportion route. |
The ₹50 lakh exclusion under the resident property rule is not an exemption under the non-resident withholding rule. Section 195 applies to a sum chargeable under the Act. For a composite payment, use the applicable determination or certificate process where the chargeable proportion or lower rate must be established. Rates in force, applicable surcharge and cess, any treaty provisions, the character of the gain and the seller’s facts matter. A buyer may propose a deduction on gross proceeds as a precaution; a gross-rate example is not a statutory universal rate.
For a non-resident individual’s ordinary long-term gain on Indian property transferred on or after 23 July 2024, the usual base rate is 12.5% without indexation. The protective comparison for land or a building acquired before that date applies to eligible resident individuals and HUFs. Long-term treatment generally requires holding for more than 24 months. Short-term gain is subject to its applicable rates. Check stamp duty valuation under section 50C for a capital asset (and distinguish stock in trade), eligible costs, improvements and transfer expenses. Under the 2025 Act, use the corresponding current provisions and rates.
Prepare and file the application
- For a legacy period use electronic Form 13 under Rules 28 and 28AA. For the current tax year, use Form 128 under Rule 213 on TRACES: choose the correct period and deduction provision and supply applicant and payer identifiers applicable to the route. Verify using the mode the portal offers for that applicant.
- Give the agreed price, payment or credit dates, title and acquisition records, seller residence, buyer share and identification details, stamp duty valuation and any evidence for the costs and expenses used. Include a clear computation and tax estimate for the whole relevant year.
- Add supporting records for a planned exemption, relevant assessed or returned income and filings for the preceding four years where required, credits and payments and existing liabilities. Under Rule 28AA the officer considers estimated tax, the assessed or returned income of the preceding four previous years as applicable, existing liabilities and current payments or credits. Explain a missing return or mismatch. An outstanding demand is not a blanket prohibition.
- Submit before any payment or credit that you want the certificate to cover. Retain the acknowledgement, monitor requests and reply within the time specified. The official guidance describes electronic processing and download. No fixed approval timeline, jurisdiction based solely on the property’s city or universal certificate identifier format should be assumed.
- Share the issued certificate with the buyer. Check its identifier, payee and payer details, covered amount, rate and validity period. Use the verified certificate only to the extent and for the period it covers. If payment timing or facts change, reassess the route and seek an updated certificate if needed.
What the buyer does
Deduct at the time prescribed for the applicable payment, generally at credit or payment, whichever occurs earlier. Under the legacy regular private-payer route, ordinary deposit timing was within seven days after the month of deduction and, for March deductions, by 30 April; file Form 27Q and furnish Form 16A. Under section 201(1A), the legacy interest rates were generally 1% per month or part of a month for failure to deduct and 1.5% for delay in remitting after deduction, measured over the respective statutory periods.
For the PAN route from 1 October 2026, use the Income Tax e-Filing portal’s Form 141 Schedule E, report each buyer’s and seller’s share, the transaction and instalment details and any applicable certificate under section 395(1) or 395(2). The notification also specifies overseas contact information and the information required where a non-resident seller has no PAN. File and pay within 30 days from the end of the month of deduction. The buyer should provide the prescribed Form 132 TDS certificate where applicable and retain the payment and filing acknowledgements. Under the regular TAN route, use the applicable current statement and certificate. The seller should reconcile credit and claim any excess through the applicable return; a certificate is not the final assessment.
Rollover relief affects the estimate
- Section 54: an eligible individual or HUF selling a long-term residential house may claim qualifying investment in a residential house in India, generally purchased within one year before or two years after transfer, or constructed within three years after transfer. The exemption is limited by eligible investment, gain and the statutory limits. Where required, deposit eligible unspent amounts in the Capital Gains Accounts Scheme by the section 139(1) due date, subject to the statutory conditions.
- Section 54F: for an eligible long-term asset other than a residential house, apply its ownership and investment conditions and measure relief using qualifying reinvestment against net consideration. Partial reinvestment can mean proportionate relief.
- Section 54EC: eligible long-term gain on land or a building may be sheltered by a qualifying bond investment within six months, subject to the ₹50 lakh aggregate cap and other conditions. A CGAS deposit does not substitute for the bond purchase.
Cash flow comparison and five historical cases
All examples are illustrative. Unless stated, assume no higher deemed consideration, no additional income, no deductions beyond those shown and no treaty change. A stated certificate percentage is an assumption for illustrating cash flow; the authority determines the rate and scope.
Opening example: ₹3 crore sale with a ₹40 lakh long-term gain
For a qualifying post-23 July 2024 sale, 12.5% plus 4% cess is 13% on a ₹40 lakh gain if no surcharge applies, or ₹5.20 lakh. If a buyer models withholding on all ₹3 crore at 12.5% plus a hypothetical 15% surcharge and 4% cess (14.95% combined), the model gives ₹44.85 lakh. That withholding assumption is separate from the seller’s estimated final liability.
Gurugram: ₹2.50 crore sale after 23 July 2024
| Item | Amount |
|---|---|
| Cost in 2012 | ₹1.20 crore |
| Long-term gain without indexation | ₹1.30 crore |
| Tax at 12.5%, 15% surcharge and 4% cess | ₹19,43,500 |
| Illustrative gross deduction at 14.95% | ₹37,37,500 |
| Illustrative certificate at 7.78% of consideration | ₹19,45,000 |
| Proceeds after illustrative certified deduction | ₹2,30,55,000 |
Estimated tax is 7.774% of consideration; applying the assumed rounded certificate rate changes deduction slightly. The two withholding scenarios differ by ₹17,92,500.
1. Mumbai: reinvestment covers part of the gain
The seller bought the apartment for ₹2.20 crore in 2014 and sold it for ₹4.80 crore in August 2024. Gain before exemption is ₹2.60 crore. If ₹1.50 crore invested in the Pune house qualifies under section 54, the remaining gain is ₹1.10 crore. At 12.5%, 15% surcharge and 4% cess, estimated tax is ₹16,44,500. The figures do not support a nil estimate based on section 54 alone.
2. Noida: loss on a commercial property
A commercial office acquired in 2017 for ₹1.80 crore sells for ₹1.45 crore in September 2024. The example gives a ₹35 lakh long-term loss before any further adjustments. Confirm the consideration and section 50C result, the cost and the nature of the asset. Provide the title, agreement and bank trail when seeking a nil certificate or chargeable proportion determination. A loss computation does not itself issue a certificate.
3. Bengaluru: eligible section 54EC bonds
Assume a sale of qualifying land before 23 July 2024 for ₹2 crore and a correctly computed historical indexed cost of ₹80 lakh. The ₹1.20 crore gain falls to ₹70 lakh after a qualifying ₹50 lakh bond investment within six months. Base tax at 20% is ₹14 lakh; surcharge at 10% is ₹1.40 lakh and cess at 4% is ₹61,600, giving ₹16,01,600. Estimated tax is 8.008% of gross price; an assumed 8.01% certificate would produce ₹16,02,000 of TDS.
4. Joint sale: resident and non-resident sellers
For a pre-23 July 2024 sale of ₹3.20 crore with equal beneficial shares, each seller receives ₹1.60 crore. Assuming no higher stamp duty value, section 194-IA withholding on the resident share is ₹1.60 lakh. For the non-resident share, assume a validly computed ₹25 lakh historical long-term gain and 20% tax plus 4% cess, giving ₹5.20 lakh. An assumed 3.25% certificate on that seller’s consideration gives the same ₹5.20 lakh withholding, or ₹6.80 lakh total across the two separate routes.
5. Delhi: property inherited in 2021
The previous owner bought the plot in 1995 for ₹8 lakh. For an October 2024 sale at ₹6.50 crore, use the applicable previous-owner cost rule and consider substituting 1 April 2001 fair market value, subject to the statutory cap based on stamp duty value where available. Assume the supported eligible cost is ₹1.45 crore. The gain before any other eligible adjustments is ₹5.05 crore without indexation. With 12.5% base tax, a 15% surcharge cap on the qualifying gain and 4% cess, the example gives ₹75,49,750 of estimated tax. Retain inheritance records, the previous owner’s documents and valuation evidence. A historic index value does not change this non-resident computation.
Frequently asked questions
1. How soon will the authority issue a certificate?
Apply early enough to respond to queries before payments or credits begin. Processing depends on the application, verification and any further requests.
2. Is the seller required to get a certificate?
No. It is an optional mechanism for obtaining a lower or nil deduction. If there is no certificate, the buyer must apply the applicable withholding rules or seek a determination; the seller can claim eligible credit and any refund in the applicable return.
3. What if closing moves into a later tax year?
Check the actual expiry date and covered transactions. A legacy certificate issued 15 January 2024 for FY 2023–24 would not cover a payment on 10 April 2024 if it expired 31 March. Obtain appropriate coverage for later payments.
4. Can a resident buyer use PAN alone?
From 1 October 2026, a qualifying resident individual or HUF can use Schedule E of Form 141 for a purchase from a non-resident. Earlier periods and buyers outside the exception use their applicable route. Do not use the resident seller schedule for the non-resident share.
5. Does buying a home outside India qualify?
No. Under the historical sections 54 and 54F, the new residential house must be in India and the other conditions must be met.
6. What if I did not file returns in some previous years?
Explain which periods were not filed and whether filing was required. Provide the requested evidence of Indian income, liability and credits. The authority assesses the whole application.
Sources
- Income-tax Act, 1961: legacy withholding, certificates and capital gains
- Finance (No. 2) Act, 2024: property capital gains and resident withholding amendments
- Income-tax Act, 2025: sections 393, 395 and 397
- Finance Act, 2026: certificate and buyer TAN changes
- Income-tax Rules, 2026: Rule 213 and Form 128
- Income Tax Department: Form 128 filing guidance
- Income Tax Department: Form 141 guidance
- CBDT Notification No. 121/2026: Forms 132 and 141 Schedule E