East Bengaluru buyer answers

What TDS applies when an NRI buys or sells a flat in Bangalore?

By , acre&key · Published · Updated

Direct answer: It depends on the seller, not the buyer. Buying from a resident seller, an NRI deducts 1% under Section 393(1) of the Income-tax Act, 2025, once the price or stamp duty value reaches ₹50 lakh. Buying from a non-resident seller falls under Section 393(2), at rates in force on the taxable sum.

Disclosure: acre&key’s advice is free to buyers; we are an authorised sales partner for some projects and may be paid by the developer.

Verify with your lawyer: This page explains public rules as published, not legal advice. Have your own property lawyer review the documents for your specific flat before you sign, pay or file anything.

Verify with your CA: This page is not tax advice. Have your own chartered accountant confirm the rate, the amount and the filing for your specific transaction before you pay.

An NRI buying a flat in Whitefield or on Sarjapur Road usually asks one question: "Do I deduct more TDS because I live abroad?" The answer is no. The law looks at who receives the money. That one fact decides which part of Section 393 applies, how much you deduct and how hard the paperwork is.

Since 1 April 2026, TDS on property sits in the Income-tax Act, 2025. Many guides still quote the old section numbers and forms. This page uses the 2025 Act only.

Why does the seller's residency decide the TDS?

Section 393 has separate tables for payments to residents and to non-residents.

  • Section 393(1) covers sums "credited or paid… to a resident". Table serial 3(i) is "consideration for transfer of any immovable property (other than agricultural land)".
  • Section 393(2) covers sums paid "to a non-resident". Table serial 17 is the catch-all: "any other sum chargeable under the provisions of this Act, not being income chargeable under the head 'Salaries'", payable to a non-resident (not being a company) or a foreign company, by "any person", at "rates in force".

So your own residency doesn't change the rate. The seller's does (Section 393).

Seller is resident Seller is non-resident
Provision Section 393(1), Table serial 3(i) Section 393(2), Table serial 17
Rate 1% of consideration or stamp duty value, whichever is higher Rates in force on the sum chargeable to tax
Threshold ₹50 lakh (Note 3) No threshold in serial 17
Typical case Builder, resident resale owner NRI owner selling a resale flat
Effort Manageable for most buyers Get a CA before you sign

How does it work when an NRI buys from a builder?

Most new flats are sold by a resident company, so serial 3(i) applies. You, the buyer, deduct:

  • 1% of the consideration or the stamp duty value, whichever is higher.
  • Only if either figure is ₹50 lakh or more. Note 1 tests this on the total paid by all buyers to all sellers, so co-buyers can't split the price to stay under it.
  • At each instalment on an under-construction flat, because tax is deducted "at the time of credit… or at the time of its payment… whichever is earlier".

The procedure is the same as for a resident buyer: deposit the tax with the challan-cum-statement in Form 141 and give the seller the certificate. Our page on how TDS on property purchase works from 1 April 2026 walks through Form 141 step by step.

Banking channel matters too. RBI's FEMA rules let NRIs and OCIs pay for a flat out of inward remittances through banking channels or by debit to an NRE, FCNR(B) or NRO account, and not by traveller's cheques or foreign currency notes (RBI Master Direction). Build the 1% into each payment so the builder's receipts match what was paid plus TDS.

What changes when the seller is an NRI?

This is the case that catches buyers out, usually on a resale flat.

Under serial 17, you deduct on the sum chargeable to tax, at rates in force. The Act gives no flat percentage here, so the base and the rate have to be worked out for the seller's case by a CA. There is no ₹50 lakh threshold in that serial. Note 3 to serial 17 also says the duty to deduct applies to every payer, resident or non-resident.

Three practical consequences:

  1. The amount can be far higher than 1%. Without a lower deduction certificate, you deduct at the rates in force on the chargeable sum. Plan the cash flow before you agree the payment schedule.
  2. The seller can apply for a lower or nil deduction certificate under Section 395(1), using Form No. 128 on the TRACES portal. If they produce one that covers your payment, you deduct at the rate it states. The department's FAQs say to apply well before the transaction, because an application can't be processed once the payment is done (Form 128 FAQs).
  3. Form 141 is for the resident-seller case. The department's Form 141 note covers TDS under Section 393(1). Ask your CA which return applies to a Section 393(2) payment on your date. Don't assume the resident-seller procedure carries over.

Section 393(2) puts the duty on "the person responsible for paying", which is you. That's why this case needs a CA before you sign, not after.

Does an NRI pay TDS on rent from the new flat?

Usually yes, but the tenant deducts it, not you. Rent paid to a non-resident landlord is a sum chargeable to tax, so serial 17 of Section 393(2) applies to the tenant. Tell tenants up front that you are non-resident, share your PAN, and keep the TDS certificates for your Indian return.

What happens when the NRI later sells?

Then you are the non-resident seller. Your buyer deducts under Section 393(2), serial 17. If you expect your tax to be lower than what the buyer would deduct, apply in Form No. 128 well before the sale so the buyer doesn't withhold more than needed. Repatriating the proceeds follows the FEMA conditions in the RBI Master Direction; check them with your bank and CA.

What should I do before the first payment?

  1. Get the seller's residential status in writing, with their PAN.
  2. For a builder sale, confirm the price and stamp duty value so you know whether ₹50 lakh is crossed.
  3. For an NRI seller, ask whether they hold or will apply for a lower deduction certificate.
  4. Ask your CA which form and timeline apply on your payment date.
  5. Put TDS in the payment schedule in the agreement so nobody is short.
  6. Keep every challan and certificate with your property papers.

For the wider purchase steps from abroad, see what an NRI needs to buy a flat in East Bangalore without travelling. For the other add-ons in your budget, see costs beyond the base price.

Frequently asked questions

Does an NRI buyer pay more TDS than a resident buyer?

No. The rate depends on the seller's residential status. An NRI buying from a resident builder deducts 1% under Section 393(1), the same as a resident buyer.

Is the ₹50 lakh threshold available when the seller is an NRI?

No. The ₹50 lakh test belongs to serial 3(i) for resident sellers. Serial 17 of Section 393(2), which covers non-resident sellers, has no threshold.

Who deducts TDS when an NRI buys from a builder?

The buyer. The duty sits with the person making the payment, and it applies at each instalment once the price or stamp duty value is ₹50 lakh or more.

Can an NRI seller reduce the TDS the buyer deducts?

Yes, by obtaining a lower or nil deduction certificate under Section 395(1). The application is Form No. 128 on TRACES, filed before the payment. The buyer then deducts at the rate the certificate states.

Do I still use the old section numbers for payments made in 2026?

Not for payments on or after 1 April 2026. Those fall under Section 393 of the Income-tax Act, 2025. Ask your CA about any instalment paid before that date.

References

  1. Income Tax Department, Income-tax Act, 2025, Section 393 (TDS), sub-sections (1) and (2). https://www.incometaxindia.gov.in/w/section-393-6, accessed 17 Oct 2026.
  2. Income Tax Department, Form No. 141 note (TDS on transfer of immovable property under section 393(1)). https://www.incometaxindia.gov.in/documents/d/guest/fn-141, accessed 16 Oct 2026.
  3. Income Tax Department, Form No. 141 FAQs. https://www.incometaxindia.gov.in/documents/d/guest/form-141-faqs, accessed 16 Oct 2026.
  4. Income Tax Department, Form No. 128 FAQs (lower/nil deduction certificate under section 395(1)). https://www.incometaxindia.gov.in/documents/d/guest/form-128-faqs, accessed 17 Oct 2026.
  5. Reserve Bank of India, Master Direction: Acquisition and Transfer of Immovable Property under FEMA. https://rbi.org.in/scripts/BS_ViewMasDirections.aspx?id=10196, accessed 17 Oct 2026.

This page explains public rules and processes. It isn't legal or tax advice. acre&key gives buyers advice for free. We are an authorised sales partner for some projects and may be paid by the developer.

Buyer advisory for East Bengaluru

Buying in East Bengaluru? Get a second opinion first.

acre&key helps buyers find, inspect, negotiate and decide, with a buyer-first perspective. Advice is free to buyers; acre&key is an authorised sales partner for some projects and may be paid by the developer.

Request Advisory Call