The situation

Where the client started.

Dubai-based banker selling a ₹3.2 Cr Bengaluru flat held for 9 years.

Problem

What was at stake.

Buyer's CA was poised to deduct TDS on the full sale consideration at 14.95% (12.5% LTCG plus 15% surcharge and 4% cess).
That would have locked up several multiples of the actual tax until the next year's refund — unworkable for the client's onward UAE property purchase.
Improvement costs and section 54/54EC options were not on the buyer-side CA's radar.

Approach

How we worked it.

Computed long-term capital gain at 12.5% under the post-23 July 2024 regime (no indexation, in line with Finance Act 2024), including allowable improvement costs.
Filed Form 13 with the jurisdictional AO requesting deduction on actual LTCG, not gross consideration.
Coordinated buyer-side TDS posting + 26QB and 16B issuance.
Routed proceeds via NRO with Form 145/146 (formerly 15CA/15CB); repatriated USD 1M under the FEMA cap.

Outcome

What changed.

Section 197 certificate issued in 31 days.
TDS withheld at 4.1% of consideration — matched final LTCG liability within 2%.
Repatriation completed in the same FY — no refund cycle, no idle capital.

Takeaway

The principle behind it.

Default 14.95% TDS on NRI property LTCG is a working-capital trap, not a tax rate. Form 13 is non-optional for any sale above ~₹1 Cr.

Why the default TDS is so high

Under Section 195 the buyer of property from a non-resident must deduct tax at the seller's applicable rate on the amount chargeable to tax. Because buyers cannot verify the seller's cost, they typically deduct on the whole sale price. For long-term gains that means 12.5% plus surcharge — 10% above ₹50 lakh and 15% above ₹1 crore — and 4% cess, applied to the gross value.

How a Section 197 certificate works

The seller applies on Form 13 through the TRACES portal with the sale agreement, purchase documents, evidence of improvement costs and a computation of the actual gain. The assessing officer issues a certificate specifying a lower rate, or nil deduction, for that buyer and transaction. It must be in hand before payment — TDS already deducted can only be recovered through the return.

Reinvestment options considered

If the seller buys a residential house in India, Section 54 can exempt the gain within its limits, and Section 54EC bonds offer exemption up to ₹50 lakh if bought within six months. Neither applies when the money is reinvested abroad — a new home in the UAE does not qualify — so for a seller buying overseas, a certificate based on the actual gain is usually the main lever.

Section 197 lower-TDS on a Bengaluru property sale from Dubai