When a resident buys property from an NRI, Section 393(2) [Table S. No. 17] of the Income-tax Act, 2025 requires the buyer to deduct tax at source on the entire sale consideration, at the rate applicable to the seller's capital gain, plus surcharge and cess. It is not the 1% that applies between two residents — that is Section 393(1) [Table S. No. 3(i)], and the department says in so many words that it does not apply when the seller is a non-resident. On a ₹2 crore flat this is the difference between ₹2 lakh and a sum many times larger, and it is withheld before you see a rupee.
The fix exists and is routinely under-used: apply to the Assessing Officer under Section 395 for an order authorising deduction at a lower or nil rate, based on the actual gain rather than the gross price. The buyer may also ask the officer handling non-resident taxation to determine the amount. Start it well before the agreement date — it takes weeks, and buyers rarely wait.
Twenty-four months is the line. Held longer, the gain is long-term and charged at 12.5%; held for less, it is short-term and charged at 20% — both before surcharge and cess, for a non-resident who is not a company. The department publishes no single figure for the surcharge or the cess: its own note reads "increased by applicable surcharge and Health & Education cess", because the surcharge turns on your total income and a treaty can reduce the whole thing. The reinvestment exemptions remain available to NRIs on the same terms as residents. Rates change with every Finance Act; confirm the position for the year in which you sell.
- From 1 October 2026 a resident individual or HUF buying from a non-resident no longer needs a TAN and may use their PAN. Any other buyer still needs one.
- Deduction is on the sale price, not the gain, unless a Section 395 order says otherwise.
- File an Indian return to claim the refund of excess tax deducted.
Source: Income Tax Department, FAQs on Tax Deducted at Source — rates for tax year 2026-27 under the Income-tax Act, 2025 as amended by the Finance Act, 2026. Checked 20 September 2026.