Updated for the Income-tax Act, 2025 · Tax year 2026-27 (1 April 2026 – 31 March 2027)

Lower TDS certificate (Form 128) for NRIs

Stop buyers, tenants and banks deducting TDS on the full amount by getting a certificate for your actual tax.

By NRI Tax Calculator editorial team · Updated

Key points

  • Form 128 (section 395) replaced Form 13 (section 197) from 1 April 2026.
  • It lets buyers, tenants and banks deduct TDS on your real tax instead of the gross amount.
  • Apply online through TRACES with your computation and property documents.
  • Apply early: the certificate must be in place before the payment is made.

When you sell property, receive rent or earn NRO interest as an NRI, the payer deducts TDS at high flat rates, often on the whole amount rather than your actual taxable income. A lower or nil TDS certificate tells the payer to deduct at a lower rate that matches your real tax. Under the Income-tax Act, 2025 you apply on Form 128 under section 395. It replaced Form 13 under section 197 from 1 April 2026.

When a lower TDS certificate is worth getting

SituationDefault TDSWhy the certificate helps
Selling property held over 24 months13%–14.95% of the full sale priceTax is only due on the gain, after costs and any reinvestment exemption
Selling at a loss or small gainSame as aboveYour actual tax may be nil
Rent from Indian property31.2% of gross rentAfter the 30% deduction and loan interest, your tax is often far lower
Low total Indian income31.2% on NRO interestIncome under ₹4 lakh (new regime) means no tax at all

For example, on a ₹1.2 crore sale with a ₹60 lakh gain, the buyer would deduct about ₹17.9 lakh while the real tax is about ₹8.6 lakh. Without a certificate, roughly ₹9.4 lakh sits with the government until your refund arrives. Run your own numbers.

How to apply on Form 128

  1. Get your PAN in order. Without a valid PAN, TDS goes up and you can't apply.
  2. Register on TRACES (the TDS portal) as a taxpayer using your PAN.
  3. Prepare a computation of your expected tax for the year: the capital gain (sale price minus cost, improvements and expenses), any exemption you'll claim, and your other Indian income.
  4. File Form 128 online with the supporting documents and submit.
  5. Respond to queries from your jurisdictional tax officer promptly. Many delays come from missing documents.
  6. Give the certificate to the payer (buyer, tenant or bank) before they pay you. It names the payer, the rate and the maximum amount.

Documents you'll usually need

  • PAN, passport and proof of NRI status (visa or residence permit)
  • Purchase deed and proof of cost: stamp duty, registration, improvement bills
  • Sale agreement or memorandum of understanding with the buyer, and the buyer's PAN
  • Your capital gains computation, and proof of any reinvestment or bond booking
  • Last few years' Indian tax returns, if you've filed them

Timing tips

  • Apply as soon as you have a signed agreement. Processing commonly takes a few weeks, and the certificate must be in place before the payment.
  • A certificate is specific to a payer and a tax year. A sale spread over two tax years, or with several buyers, may need more than one.
  • If the deal closes before the certificate arrives, you haven't lost the money: file your return and claim the excess TDS as a refund.

Try the calculator

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Frequently asked questions

What is Form 128?
Form 128 is the application for a lower or nil TDS certificate under section 395 of the Income-tax Act, 2025. It replaced Form 13 under section 197 from 1 April 2026.
How long does a lower TDS certificate take?
Commonly a few weeks, depending on your tax office and how complete your documents are. Apply as soon as you have a signed sale agreement.
Can I get a nil TDS certificate if I sell at a loss?
Yes. If your computation shows no taxable gain and no other tax payable, the officer can issue a nil-deduction certificate.
What if the sale happens before I get the certificate?
The buyer deducts at the normal rate. You can still claim the excess as a refund by filing your Indian income tax return for that tax year.
Selling property or owed a refund?

A chartered accountant who works with NRIs can get a lower-TDS certificate, file your return and handle repatriation paperwork.

Sources

This guide is general information based on the law as at 25 October 2026, not tax or legal advice.