Selling property in India as a Non-Resident Indian (NRI) involves tax implications, including Tax Deducted at Source (TDS). Understanding TDS rules is crucial for NRIs to ensure compliance and minimize tax liabilities. This guide covers the TDS rules, key considerations, and ways to optimize your tax situation when selling property in India.What is TDS on Sale of Property for NRIs?When an NRI sells property in India, TDS is deducted by the buyer at the time of payment. The TDS rate for NRIs is higher than for resident Indians to reflect special tax treatment under the Income Tax Act.Key TDS Rules for NRIs Selling Property in India

1. TDS Rates:
   • Short-Term Capital Gains (less than 2 years ownership): 30% TDS.
   • Long-Term Capital Gains (more than 2 years ownership): 20% TDS plus applicable surcharge and cess.
2. Buyer’s Responsibility: The buyer must deduct TDS before paying the NRI seller. Non-compliance can lead to penalties for the buyer.
3. PAN Requirement: Both parties must have a valid PAN in India. Without PAN, TDS may be deducted at a higher rate. Learn more about PAN requirements.
4. Form 15CA and 15CB: The buyer must file Form 15CA and, in some cases, obtain Form 15CB certified by a Chartered Accountant to ensure correct tax deduction. Learn about Form 15CA and 15CB.
5. Lower TDS Certificate: NRIs can apply for a lower TDS certificate to reduce TDS rates if their tax liability is less than the standard rate. Check the procedure.

How to Calculate TDS on Property Sale for NRIsTDS is calculated on the total sale value, not just the profit. For instance, if a property is sold for ₹1 crore and was purchased for ₹70 lakhs, TDS is deducted on ₹1 crore.Steps to Deduct and Pay TDS

1. Calculate TDS: Determine the TDS on the sale value.
2. Deposit TDS: Deposit the TDS with the government within 30 days of the deduction.
3. File Form 26QB: File this form to report the TDS. Read more on TDS filing.
4. Issue Form 16B: Provide this form to the NRI seller as proof of TDS deduction.

Benefits of Proper TDS Compliance

• Avoid Penalties: Proper compliance prevents penalties and legal issues.
• Claim Tax Refunds: NRIs can claim refunds if excess TDS is deducted by filing tax returns.
• Repatriation of Funds: Ensures smooth repatriation of proceeds.
• DTAA Benefits: Leverage tax treaties to reduce liabilities. Learn more about DTAA.

Common Mistakes to Avoid

• Incorrect TDS Calculation: Consult tax professionals for accurate deductions.
• Not Filing Required Forms: Ensure timely filing of Forms 15CA and 15CB.
• Ignoring Lower TDS Certificates: Applying for these can help manage cash flow.
• Failing to File Tax Returns: Filing returns ensures compliance and potential refunds.

ConclusionComplying with TDS rules when selling property as an NRI in India is vital for smooth transactions and managing tax liabilities. Seek professional advice, stay updated with the latest rules, and make the most of available tax benefits. For further guidance, visit the Income Tax Department’s official page.