Buying from an NRI seller in Gurugram: the TDS numbers on most websites are out of date
The 20.8% and 23.92% figures still quoted everywhere come from a tax rule that changed in July 2024. And from April 2026 the section numbers themselves changed. The current position — and why the buyer carries the risk.
If the seller is an NRI, the tax obligation is yours, not theirs — and getting it wrong is expensive.
When you buy from a resident seller, you deduct 1% TDS on anything above ₹50 lakh and move on. When you buy from a non-resident, you step into a different regime entirely: the deduction is on the whole sale consideration rather than the seller's gain, the rate is far higher, and the liability for getting it wrong sits with you as the deductor.
This is the most commonly botched part of a Gurugram resale, and the reason is that a lot of the guidance online is genuinely out of date.
Ignore any page still quoting 20.8% or 23.92%
Those figures derive from the pre-July-2024 long-term capital gains regime — 20% with indexation, grossed up with cess and surcharge. That regime changed.
For property held more than 24 months, LTCG was rationalised to 12.5% without indexation with effect from 23 July 2024. The effective TDS, once surcharge and the 4% cess are applied, now lands roughly in the 13%–14.95% band. It is a band, not a number: the surcharge slab depends on the sale value, so 14.95% is the top of the range, not the default.
The section numbers changed on 1 April 2026
The Income-tax Act, 2025 replaced the 1961 Act with effect from 1 April 2026, renumbering provisions without, in this area, changing the substance. An article citing only the old section numbers is describing law that is no longer the current citation.
For payments or credits on or after 1 April 2026, the resident-seller 1% deduction everyone knows as section 194-IA is now section 393(1). The non-resident regime known as section 195 is now section 393(2). The lower-deduction certificate route under section 197 is reported to have moved to section 395 — that renumbering is more thinly sourced than the others, so confirm it with your CA rather than relying on it.
Resident seller vs NRI seller — the practical difference
| Resident seller | Non-resident seller | |
|---|---|---|
| Deducted on | Consideration above ₹50 lakh | The entire sale consideration, not the gain |
| Rate | 1% | Roughly 13%–14.95% effective, surcharge-dependent (LTCG basis) |
| Current citation | s.393(1), Income-tax Act 2025 (was s.194-IA) | s.393(2), Income-tax Act 2025 (was s.195) |
| Form | Form 26QB | Handled through the TDS return route, not Form 26QB |
| Seller's relief | Not usually needed | Lower or nil deduction certificate — Form 13 via TRACES |
Positions as reported by tax practitioners following the Income-tax Act 2025 commencement. Confirm with a chartered accountant before you deduct — the buyer carries the liability.
The seller's route out: Form 13
Because the deduction is on gross consideration rather than gain, an NRI seller with a modest actual profit can face TDS far exceeding their real tax. The fix is a lower- or nil-deduction certificate, applied for online through TRACES on Form 13, which restricts the deduction to the actual gain.
This is normal and legitimate. If your NRI seller produces one, deduct at the rate the certificate specifies — and keep a copy. If they ask you to simply deduct less without a certificate, refuse: the exposure is yours, not theirs.
One more trap: joint buyers no longer split the threshold
With effect from 1 October 2024, where there are multiple buyers or multiple sellers, the ₹50 lakh threshold is tested on the aggregate consideration across all parties — not on each person's individual share.
That closed a workaround a lot of Gurugram husband-and-wife purchases used to rely on. If the total deal crosses ₹50 lakh, TDS applies, however you split the names on the agreement.
Before you pay an NRI seller
- Establish residential status for tax purposes in writing — do not infer it from an address or a passport
- Confirm whether the holding period exceeds 24 months (long-term) or not (short-term, taxed at slab rates)
- Ask for a Form 13 lower-deduction certificate if the seller wants a reduced rate
- Have your CA compute the exact rate, including the applicable surcharge band, before you release funds
- Confirm you hold the correct deduction credentials before the payment date, not after
- Keep the deduction, deposit and certificate trail — you are the one who has to produce it
This is general information, not tax advice. Rates, sections and procedures change; engage a chartered accountant for your specific transaction.
Sources & citations›
- Income-tax Act, 2025, in force from 1 April 2026 — s.393(1) (formerly s.194-IA) and s.393(2) (formerly s.195); reported renumbering of s.197 to s.395 (thinly sourced — verify before relying on it).
- Long-term capital gains on immovable property rationalised to 12.5% without indexation with effect from 23 July 2024; effective TDS on non-resident sellers of roughly 13%–14.95% depending on the applicable surcharge band.
- Finance (No. 2) Act 2024, effective 1 October 2024 — the ₹50 lakh threshold tested on aggregate consideration across multiple buyers and sellers.
- Lower or nil deduction certificate: Form 13, applied online via TRACES.
Reading is the easy part. Trusting a listing is the hard part.
Every home on villow is verified before you see it — title, RERA, true carpet area, the all-in price — and your number is never sold to a wall of brokers.
Talk to a Villow advisorMore from the blog
Where to buy in Gurgaon in 2026: a corridor-by-corridor buyer's guide
7-min read'Pre-launch' offers in Gurgaon: why the discount can be illegal — and how to vet a new launch
6-min readGolf Course Road vs Golf Course Extension Road: what the price gap actually buys
5-min read