What TDS applies when I buy property from an NRI?

Question

tdsguru.in (CA firm) · Accepted Answer

TDS is under Section 195 (not 194-IA) — deduct at the capital-gains rate plus surcharge and cess (about 12.5%–15% on long-term gains), and you need a TAN and Form 27Q/144. Buying immovable property from a non-resident falls under Section 195, not the 1% under 194-IA that applies to resident sellers. You deduct at the applicable capital-gains rate (long-term gains are generally taxed around 12.5% plus surcharge and cess; short-term at slab rates) on the sale consideration, unless the seller obtains a lower-deduction certificate under Section 197. The buyer needs a TAN, deposits the TDS, and files Form 144 (27Q). Because deducting on the full consideration can be harsh, many NRI sellers obtain a 197 certificate fixing TDS on the actual gain.