- May 28, 2026
- Posted by: Amit Mundhra CA
- Category: Income Tax
The documents required for lower TDS certificate as an NRI selling property in India fall into three groups: property documents, personal tax documents, and TRACES account prerequisites. The application is filed online through Form 128 under Section 395(1) of the Income Tax Act, 2025, this replaces the old Form 13 under Section 197. Here is the complete checklist, followed by the step-by-step filing process on TRACES.
What This Article Covers
- Complete documents required for lower TDS certificate and NRI property sale checklist
- How to apply for lower TDS deduction certificate online – step by step on TRACES
- How long it takes to get a lower TDS certificate and what affects the timeline
- How to download LDC certificate from TRACES and verify it
- What rate the lower TDS deduction certificate will specify and whether it can be zero
- How much a lower deduction certificate actually saves
- Tax rates for NRI property sale for LTCG and STCG
- Frequently asked questions from NRI sellers
Documents Required for Lower TDS Certificate : NRI Property Sale Checklist
The documents fall into three groups. Have all of them ready before you start filing, a missing document triggers a query from the Assessing Officer, and that adds weeks to the process.
Group A — Property Documents
| Document | Purpose | Format |
| Sale agreement / MOU with buyer | Establishes sale value, buyer identity, and expected transaction date | Copy |
| Original property purchase deed | Establishes cost of acquisition and purchase date determines LTCG or STCG | Copy |
| Cost of improvement records | Renovation or construction costs after purchase reduces the taxable gain | Bills, invoices, bank payment records |
| Capital gains computation | Shows your actual tax liability the foundation of the AO’s decision | Prepared by your CA |
| Buyer’s TAN (Tax Deduction Account Number) | Mandatory for Annexure I of Form 128 identifies the deductor | Copy of TAN allotment letter or TRACES verification |
| Property registration / title documents | AO may call for these to verify ownership | Copy |
Note on buyer’s TAN: As of the date of this article, buyers of NRI property must obtain TAN before deducting TDS. A PAN-based mechanism is expected from 1 October 2026 onwards. Confirm the current position with your CA before the transaction proceeds.
Group B — NRI Personal Tax Documents
| Document | Purpose | Format |
| PAN Card | Mandatory application cannot be filed without an active PAN | Copy |
| Valid passport | NRI identity proof and residential status confirmation | Copy |
| Overseas address proof | Foreign address as registered in your TRACES profile | Utility bill or overseas bank statement, not older than 3 months |
| Income Tax Returns for last 4 Tax Years | Rule 213(3)(b) requires the AO to consider tax paid on returned income for the preceding 4 years | ITR acknowledgements downloaded from the Income Tax portal |
| Form 26AS / Annual Information Statement (AIS) | Shows TDS already credited to your account for the current year | Downloaded from the Income Tax portal |
| Advance tax or self-assessment tax challans | If any taxes already paid for the current year strengthens your prepaid tax position | Challan copies or AIS extract |
| NRO bank account details | May be needed for profile verification or AO queries | NRO account statement |
If ITRs are missing for any of the last 4 years: Rule 213 requires returns to have been filed on time. If there are gaps, prepare a computation of income for those years. Your CA will need to address this in the application.
Group C — TRACES Account Prerequisites
| Requirement | Details |
| TRACES NRI account | NRIs use nriservices.tdscpc.gov.in not the standard taxpayer TRACES portal. Register and activate the account before filing. |
| Income Tax e-filing portal login | Needed to download ITR acknowledgements, Form 26AS, and AIS. Register at incometax.gov.in if not already done. |
| Digital Signature Certificate (DSC) or EVC | Form 128 requires electronic signing. DSC is preferred for NRIs. EVC via net banking works if your Indian bank account supports it. |
How to Apply for Lower TDS Deduction Certificate Online : Step-by-Step on TRACES
Form 128 must be filed electronically — there is no offline option. Everything happens on the TRACES NRI portal at nriservices.tdscpc.gov.in. The application is reviewed by your Jurisdictional Assessing Officer for NRIs, this is typically the International Taxation circle or the Non-Resident AO having jurisdiction over your PAN.
Step 1 – Register on the TRACES NRI portal Go to nriservices.tdscpc.gov.in and register as a new user. You will need your PAN, date of birth, and either details of TDS already deducted (TAN of deductor, amount) or a challan you have paid. Activate your account within 48 hours using the link sent to your registered email.
Step 2 – Log in and navigate to Form 128 After logging in, go to the e-Filing section and select Form 128. Application for Lower or Nil Deduction Certificate under Section 395(1).
Step 3 – Fill Part A: Applicant Details Enter your full name without abbreviations, complete address including country, PAN, residential status (Non-Resident), email, and contact number. Several fields will be pre-filled from your TRACES profile.
Step 4 – Fill Part B: Nature of Request Select your applicant category for most NRI property sellers this is “Persons other than registered non-profit organisation or specified entity.” Tick the request type: certificate to be issued to your buyer, with deduction at a lower rate.
Step 5 – Fill Part C: Existing Tax Liabilities Declare any outstanding demand, unpaid TDS liability as a deductor, or advance tax due as on the date of application. Be accurate undisclosed liabilities can result in rejection.
Step 6 – Fill Part C, Item 5: Income and Tax Details This is the core of the application. Enter your estimated total income for the current Tax Year, tax payable on that income, any income claimed as exempt with the reason, prepaid taxes as reflected in AIS, and ITR details for the preceding 4 Tax Years acknowledgement number, date of filing, taxable income, and tax liability.
Step 7 – Fill Annexure I: Payer Details Enter the section under which TDS is deductible (Section 393(2) old reference: Section 195), your buyer’s TAN, the estimated sale consideration, and the rate of deduction you are requesting. Enter 0 if you are seeking nil deduction.
Step 8 – Upload Supporting Documents Upload the capital gains computation, property documents, ITR acknowledgements, and any other supporting documents. File size and format requirements are shown on the portal at the time of upload.
Step 9 – Fill Part E: Declaration Confirm that ITRs have been filed for all Tax Years in which they were due, and that the income in the form is not includible in the total income of any other person.
Step 10 – Fill Part F: Verification Sign the verification with your full name, PAN, and capacity (Individual or Authorised Representative).
Step 11 – Sign using DSC or EVC and Submit Attach your Digital Signature Certificate or authenticate via EVC, then submit the application.
Step 12 – Note the ARN On successful submission, the system generates an Acknowledgement Reference Number. Save it. You will need this to track the application.
Step 13 – AO Review and Queries The application goes to your Jurisdictional Assessing Officer. The AO reviews the documents and computation. If additional information is needed, a query arrives through the portal. Respond promptly, delays on your end directly delay the certificate.
Step 14 – Certificate Issued and Shared with Buyer Once satisfied, the AO issues the certificate through TRACES. It specifies the rate of deduction, the buyer’s TAN, the maximum transaction amount, and the validity period. Download it and share it with your buyer before the sale proceeds are paid. The buyer is legally bound to deduct TDS at the rate specified in the certificate.
Practical note: Most NRI clients have their CA manage the full application and all AO correspondence. The AO’s queries are technical and time-sensitive and a CA who handles this regularly responds faster and more effectively than someone doing it for the first time.
How Long Does It Take to Get a Lower TDS Certificate?
Allow 4 to 6 weeks from the date of filing. The actual time varies from one Assessing Officer to another — some international taxation circles move faster than others.
The timeline extends if the AO calls for additional information or schedules a hearing. When that happens, how quickly you respond determines how quickly the certificate arrives.
The most important timing decision: apply before the sale agreement is signed, not after. Once the buyer makes payment without an LDC in place, TDS at the standard rate is already deducted. The certificate cannot undo that.
How to Download LDC Certificate from TRACES and Verify It
Once the AO approves the application, the certificate is available on the TRACES portal.
To download the certificate:
- Log in to nriservices.tdscpc.gov.in
- Go to the LDC / Form 128 section
- Find your application using the ARN
- Download the certificate in PDF format
- Share it with your buyer before payment is made
For the buyer to verify the certificate: The buyer can check authenticity directly on the TRACES portal using the unique reference number on the certificate. This protects the buyer from relying on a tampered or invalid document.
The certificate applies only to the specific buyer identified by TAN, the transaction amount stated, and the validity period on the certificate. If you have multiple buyers or receive payment in tranches, factor this into the application at the time of filing.
Lower TDS Deduction Certificate : What Rate Will It Specify and Is There a Limit?
The rate depends entirely on your estimated tax liability for the year. If your capital gain after exemptions is zero, for example, you have reinvested the proceeds in a new residential property within the prescribed timeline and meet all conditions, the AO can issue a nil deduction certificate. Your buyer deducts zero TDS.
If the gain is partially exempt, the rate reflects the tax on the remaining taxable amount as a proportion of the total consideration.
The AO has full discretion. A well-prepared computation with clean documentation gives you the best chance of getting the lowest justified rate. A weak or incomplete application may result in a higher rate or rejection.
Four things to know before you apply:
- The rate you request in Annexure I must match the computation in Part C. Any gap between the two invites AO questions.
- The certificate can cover the full transaction or a specified portion, depending on what you apply for.
- The certificate lapses at the end of the validity period it does not carry forward to the next Tax Year.
- If the reinvestment is still in progress when you apply, the AO may ask for evidence a Capital Gain Account Scheme (CGAS) deposit or documentation showing the investment is firmly committed.
How Much Tax Does a Lower Deduction Certificate Save : Working Example
TDS is deducted on the full sale value, while your actual tax applies only to the capital gain. The gap between the two is what the LDC eliminates.
You purchased a property in 2015 for ₹40 lakh and are selling it today for ₹80 lakh. Held for more than 24 months, so this qualifies as a Long-Term Capital Gain.
| Without LDC | With LDC | |
| Sale consideration | ₹80,00,000 | ₹80,00,000 |
| Capital gain | ₹40,00,000 | ₹40,00,000 |
| Actual tax @ 12.5% on gain | ₹5,00,000 | ₹5,00,000 |
| TDS deducted by buyer | ₹10,00,000* | ~₹5,00,000 |
| Amount blocked pending refund | ~₹5,00,000 | Nil |
*TDS at 12.5% on the full sale value of ₹80 lakh = ₹10 lakh before surcharge and cess. The effective deduction with surcharge and cess is higher.
Without the LDC, ₹5 lakh or more sits with the Income Tax Department until your refund is processed — which can take over a year. With the certificate in place, that blockage is eliminated entirely.
Tax Rates for NRI Property Sale for LTCG and STCG
Knowing your applicable tax rate matters because it determines the rate you request in Form 128. The Assessing Officer checks that your request is backed by the computation.
| Type of Gain | Holding Period | Tax Rate | Indexation |
| Long-Term Capital Gain (LTCG) | More than 24 months | 12.5% + surcharge + 4% cess | Not available to NRIs |
| Short-Term Capital Gain (STCG) | 24 months or less | 30% + surcharge + 4% cess | Not applicable |
Surcharge depends on total income for the year: 10% for income between ₹50 lakh and ₹1 crore; 15% between ₹1 crore and ₹2 crore; higher rates above ₹2 crore subject to applicable provisions. No surcharge if total income is below ₹50 lakh.
On a gain of ₹40 lakh where total income stays below ₹1 crore, the effective LTCG rate works out to approximately 14.30% after surcharge and cess. For STCG in the same income bracket, the effective rate is approximately 34.32%. Your CA will work out the exact figure based on your full income for the year.
Old Law Reference vs New Law Reference
If you have come across Form 13 and Section 197 in your research, those are the references under the Income Tax Act, 1961. With the Income Tax Act, 2025 in force from 1 April 2026, the numbering has changed. The process is the same only the labels are different.
| Concept | Old Reference (IT Act, 1961) | New Reference (IT Act, 2025) |
| Governing section | Section 197 | Section 395(1) |
| Governing rule | Rule 28AA | Rule 213 |
| Application form | Form 13 | Form 128 |
| TDS on NRI property | Section 195 | Section 393(2) |
Estimate Your Tax Before Applying : Capital Gains Calculator
Before preparing the Form 128 application, use the capital gains calculator on karnanica.com to work out your likely tax liability. This gives you the number you need to justify the rate you request in the certificate.
Knowing your tax position upfront also helps you decide whether to claim an exemption, how much to invest, and whether a nil or reduced rate certificate is realistic in your case.
Calculate Your Capital Gains Tax
Frequently Asked Questions
Q.1 Is Form 128 the same as Form 13 for lower TDS certificate? Which one should I file?
They are the same application with different names. Form 13 was used under Section 197 of the Income Tax Act, 1961. From 1 April 2026, it has been replaced by Form 128 under Section 395(1) of the Income Tax Act, 2025. If you are filing from 1 April 2026 onwards, use Form 128 on the TRACES portal. References to Form 13 you find online apply to transactions processed before that date.
Q.2 Can I apply for a lower deduction certificate after the buyer has already deducted TDS?
No. The certificate must be in place before TDS is deducted. Once the buyer has deducted at the standard rate, there is no way to reduce it through the LDC route. Your only option at that point is to file an income tax return and claim a refund of the excess amount deducted.
Q.3 Does the buyer need TAN to deduct TDS on NRI property purchase?
Yes, as of the date of this article. TAN is mandatory for buyers deducting TDS on NRI property transactions under Section 393(2). It is also required to complete Annexure I of Form 128. A PAN-based mechanism is expected from 1 October 2026 confirm the current position with your CA before the transaction proceeds.
Q.4 Can I get a nil deduction certificate if I am claiming a capital gains exemption?
Yes. If the reinvestment conditions are met or are being met within the prescribed timelines, and the AO is satisfied that your net tax liability for the year is nil, a nil deduction certificate can be issued. You will need to show the exemption claim clearly in the computation. If the investment is still pending, provide evidence a CGAS deposit or documentation showing the investment is firmly committed.
Q.5 Who files Form 128 for lower TDS certificate, me or my CA?
The application is filed under your PAN and TRACES login. In practice, most NRIs authorise their CA to manage the filing and all correspondence with the AO. Given that AO queries are technical and time-sensitive, having a CA handle this end-to-end is the right approach for most people.
Q6. What happens if the Assessing Officer rejects the lower TDS application?
The AO can reject the application if prescribed conditions are not met or if it is incomplete. The buyer must then deduct TDS at the standard rate, and you claim the refund through your income tax return. To avoid rejection, make sure the computation is technically sound, documents are complete, and the rate requested is clearly backed by the numbers.
Q7. What is the validity period of a lower deduction certificate under Section 395?
The certificate is valid for the period the AO specifies typically the current Tax Year. It applies only to the specific buyer identified by TAN, the type of payment, and up to the transaction amount stated. It does not automatically renew.
Q8. What surcharge applies to an NRI on LTCG from a property sale in India?
Surcharge depends on total income. Below ₹50 lakh, no surcharge applies. Between ₹50 lakh and ₹1 crore, the surcharge is 10%. Between ₹1 crore and ₹2 crore, it is 15%. Above ₹2 crore, higher rates apply. On a gain of ₹40 lakh where total income falls between ₹50 lakh and ₹1 crore, the effective LTCG rate works out to approximately 14.30% — that is 12.5% tax, plus 10% surcharge on the tax, plus 4% cess on the combined amount. Your CA will calculate the exact figure based on your full income for the year.
Ready to Apply? We Handle This End to End
Getting a lower TDS certificate right means preparing a technically sound capital gains computation, filing Form 128 on TRACES, and staying on top of AO queries — often while a sale timeline is running.
At Karnani & Co., we manage the entire process for NRI clients: from the first estimate of your capital gains tax to filing Form 128, handling AO correspondence, and following through to certificate issuance. We work with NRI sellers in the US, UK, UAE, Australia, Canada, and other countries.
The right time to reach out is before the sale agreement is signed.
Also read:
Complete NRI property sale compliance checklist — a stage-by-stage guide covering the full compliance process from pre-sale planning to remittance and return filing.
For a broader view of the tax and compliance issues NRIs face when selling property in India, see our NRI capital gains advisory page.
