Worked example: a Rs 1 crore sale by an NRI
An NRI sells a Kochi flat held for six years for Rs 1 crore. Cost, improvements and transfer costs total Rs 70 lakh, so the long-term gain is Rs 30 lakh.
| Route | TDS at sale | Final tax | Cash blocked |
|---|---|---|---|
| No certificate, no reinvestment | Rs 14,30,000 (14.3%) | Rs 3,90,000 | Rs 10,40,000 until refund |
| Lower TDS certificate (Form 128) | About Rs 3,90,000 | Rs 3,90,000 | Nil |
| Certificate + Rs 30 lakh in capital gains bonds (section 85) | Lower or nil, if the officer accepts the plan | Nil | Rs 30 lakh in bonds for 5 years |
| Certificate + new house in India costing Rs 30 lakh or more (section 82) | Lower or nil, if the officer accepts the plan | Nil | Money in the new house |
Arithmetic: 12.5% of Rs 30 lakh is Rs 3,75,000; with 4% cess, Rs 3,90,000 (no surcharge, as income is below Rs 50 lakh). TDS on the Rs 1 crore price is 12.5% plus 10% surcharge plus 4% cess = 14.3% (the 15% surcharge applies only above Rs 1 crore).
Five mistakes the calculator cannot fix
- Signing the agreement before applying for the lower TDS certificate.
- Agreeing a price below the stamp duty value: the higher value can be taxed. See the stamp duty value rule.
- Joint owners treating the sale as one transaction. See joint owners and TDS.
- Missing the six-month window for bonds. See house vs bonds.
- Not checking that the buyer actually deposited the TDS. See what to do if the buyer defaults.