TDS on property sale

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CategoriesLand Investment

Section 45(5A) and 54F: The Landowner Tax Playbook on a JDA and a Land Sale

By Girish Chhalwani,

TL;DR

  • Section 45(5A) applies only to individuals and HUFs, and only where the joint development agreement is registered. A company, an LLP or a firm does not get it.
  • It shifts the year of taxation to the year the local authority issues the completion certificate for the whole or part of the project, instead of the year the land is handed over.
  • Full value of consideration is the stamp duty value of the units received as on the date of the completion certificate, plus any cash received.
  • The relief is lost if the landowner transfers their share in the project before the completion certificate is issued. The gain is then taxed in the year of that transfer, using the stamp duty value at that time.
  • Monetary consideration under such an agreement carries TDS at 10 per cent under section 194-IC, rising to 20 per cent where PAN is not furnished.
  • Land held over 24 months is long term. After 23 July 2024 the rate is 12.5 per cent without indexation, and a resident individual or HUF holding property acquired before that date may instead opt for 20 per cent with indexation.
  • Section 54F can shelter the whole gain if the entire net consideration is reinvested in one residential house, subject to the one-house condition and a cap of Rs 10 crore from 1 April 2024. Section 54EC bonds take up to Rs 50 lakh.

Girish Chhalwani, Founder & CEO, THE EDGE Developments · 20+ years in Maharashtra land acquisition, tenure and NA conversion · 9 min read · Last updated 13 September 2026

The reason landowners get hurt in joint development is not the rate, it is the timing: without section 45(5A) the tax falls in the year the land is handed to the developer, years before a single unit or rupee comes back. Understanding when the liability crystallises, and what forfeits the deferral, is worth more to a landowner than any negotiation on the revenue share.

The problem section 45(5A) was written to solve

A joint development agreement typically hands the developer possession and rights over the land at signing. On ordinary capital gains principles that is the transfer, and the gain arises then. The landowner receives no money at that point, and often no units for three to five years. The result is a demand in a year with no liquidity behind it, satisfied by selling something else.

Section 45(5A) breaks that link by fixing the year of taxability at the year in which the certificate of completion is issued for the whole or part of the property. The gain still arises, and it still relates to the original transfer, but it becomes payable at a point when the landowner actually holds something realisable.

Who qualifies, and who does not

Eligibility for the section 45(5A) deferral
Landowner Deferral available Consequence if not
Individual Yes —
Hindu Undivided Family Yes —
Partnership firm No Gain taxed on ordinary principles in the year of transfer
LLP No Gain taxed on ordinary principles in the year of transfer
Private limited company No Gain taxed on ordinary principles in the year of transfer

This is the single most consequential fact in the section and it is routinely discovered too late, after the land has already been moved into a company for some unrelated reason. If a landholding is going into a joint development and the holder is an individual or a HUF, think very hard before restructuring the ownership first.

How the consideration is computed

Full value of consideration is the stamp duty value of the share of the project received by the landowner, as on the date the completion certificate is issued, plus any cash received.

Two features of that formula deserve attention. The valuation date is the completion certificate date, not the agreement date, so the landowner is taxed on the value of what the project has become rather than what was promised. And the cash component is added in full, which means a deal structured with a large upfront cash payment carries a larger measured gain than the same deal structured with more units.

FVC equals stamp duty value of the property you received as on the date of issue of Completion Certificate plus cash received, if any.

ClearTax, on the computation under section 45(5A)

The trap that forfeits the deferral

If the landowner transfers their share in the project before the completion certificate is issued, section 45(5A) does not apply, and the gain is taxed in the year in which that transfer took place, using the stamp duty value at that time.

This catches people who do the commercially obvious thing. A landowner who books a strong price for their allocated units during construction, or who sells the entitlement to a third party because a better use for the money appeared, has just pulled the tax event forward by years and lost the structure the section was giving them. If a pre-completion exit is genuinely wanted, model the tax before signing anything, not after.

TDS on the cash leg

Where the developer pays monetary consideration under such an agreement, section 194-IC requires deduction of tax at 10 per cent, rising to 20 per cent where the landowner has not furnished PAN. It is deducted on the payment, so it lands well before the gain becomes taxable under section 45(5A), and the credit has to be tracked across years rather than assumed to sit in the same return as the income.

Rate: what changed on 23 July 2024

Land and buildings are long-term capital assets when held for more than 24 months. The rate position after the Finance (No. 2) Act 2024 is a two-track one, and which track applies is a matter of who you are and when you bought.

Long-term capital gains on land after 23 July 2024
Situation Rate Indexation
Property acquired on or after 23 July 2024 12.5 per cent Not available
Resident individual or HUF, property acquired before 23 July 2024 Option of 12.5 per cent or 20 per cent, whichever is better Available only on the 20 per cent option
Other taxpayers 12.5 per cent Not available

For land bought long ago at a low cost, the 12.5 per cent route usually wins because indexation on a small base does not move much. For land bought comparatively recently at a high cost, the 20 per cent with indexation route can win. It is an arithmetic question, and it should be answered with the actual numbers rather than a rule of thumb.

Section 54F, and the conditions people fail

Section 54F exempts the gain on sale of a long-term capital asset other than a residential house, where the net consideration is reinvested in one residential house. Land is the classic qualifying asset, which is why this section matters so much to the readership of this article.

  1. Reinvestment window. Purchase from one year before the sale to two years after, or construct within three years of the sale.
  2. The one-house condition. The taxpayer must not own more than one residential house on the date of transfer. This is the condition that most often disqualifies people who assumed the section was available to them.
  3. Proportionate relief. Exemption equals amount reinvested divided by net consideration, multiplied by the long-term capital gain. Reinvest everything and the whole gain is sheltered. Reinvest part and you shelter that proportion, not that amount.
  4. Lock-in. The new house cannot be sold within three years of purchase or completion without the exemption being disturbed.
  5. Capital Gains Account Scheme. If the money cannot be reinvested before the return filing deadline, park it in CGAS to hold the exemption open.
  6. The cap. From 1 April 2024 the exemption is capped at Rs 10 crore however much is actually invested.

Section 54EC sits alongside as a smaller, simpler alternative: up to Rs 50 lakh into specified bonds. It is not an either-or with 54F in principle, but the arithmetic of combining them needs doing case by case.

Putting it together

The same land, three routes
Route When tax falls Shelter available
Outright sale of the land Year of sale 54F on full reinvestment, 54EC up to Rs 50 lakh
JDA, individual or HUF, share held to completion Year of the completion certificate 54F available on the gain, subject to its own conditions
JDA, share sold before the completion certificate Year of that earlier transfer Same sections, but the deferral is gone and the timing is out of your hands

The point is not that one route dominates. It is that the routes have materially different timing, and timing is what determines whether a landowner pays out of the deal or out of savings.

Frequently asked questions

Who can use section 45(5A)

Only individuals and Hindu Undivided Families, and only where the joint development agreement is registered. Firms, LLPs and companies are outside it.

In which year is the JDA gain taxed

In the year the local authority issues the completion certificate for the whole or part of the project, provided the landowner has not transferred their share earlier.

What happens if I sell my share before completion

The deferral is lost. The gain is taxed in the year of that transfer, computed using the stamp duty value at that time.

What is the TDS rate under section 194-IC

Ten per cent on the monetary consideration paid by the developer, and twenty per cent where PAN has not been furnished.

Can I claim section 54F if I already own a house

You may own one residential house on the date of transfer and still claim it. Owning more than one on that date disqualifies you.

Is there a limit on the section 54F exemption

Yes. From 1 April 2024 the exemption is capped at Rs 10 crore regardless of how much is actually reinvested.

Should I choose 12.5 per cent or 20 per cent with indexation

Only a resident individual or HUF holding property acquired before 23 July 2024 has the choice, and it should be decided by computing both on the actual cost and date rather than by a rule of thumb.

Considering a joint development on land you hold personally? The ownership structure and the exit timing decide the tax outcome, and both are set before the agreement is signed.

Talk to THE EDGE

Related reading

Citations and sources

This article is general information on the law as it stands at the date above. It is not tax advice on any particular transaction. Compute your position with a chartered accountant before signing.

Two people exchanging house keys over a wooden desk with a document folder and pen
CategoriesLand Investment

TDS on Property Purchase 2026: Form 26QB Step-by-Step Guide

By Girish Chhalwani,

Key Takeaways

  • 1% TDS is mandatory when a resident buyer purchases immovable property (other than agricultural land) for Rs 50 lakh or more, under Section 194-IA of the Income-tax Act, 1961.
  • The 1% is charged on the sale consideration or the stamp-duty (ready-reckoner) value, whichever is higher — a rule in force since 1 April 2022.
  • You deposit the TDS using Form 26QB within 30 days from the end of the month in which you deducted it, then issue Form 16B to the seller within 15 days of that due date.
  • No TAN is needed — the buyer uses their PAN. But if the seller does not give a PAN, TDS jumps to 20% under Section 206AA.
  • From 1 October 2024, joint buyers or joint sellers are assessed on the aggregate consideration — sub-Rs 50 lakh shares no longer escape TDS.
  • If the seller is an NRI, Section 194-IA does not apply — a different, higher regime under Section 195 takes over.

By Girish Chhalwani, Founder & CEO, THE EDGE Developments · 20+ years in Maharashtra land acquisition and land-investment advisory · Reading time: 7 min · Last updated: 2 August 2026

The 1% TDS rule on a property purchase, in one answer

When a resident buyer purchases immovable property — other than agricultural land — for Rs 50 lakh or more, the buyer must deduct 1% TDS under Section 194-IA of the Income-tax Act, deposit it through Form 26QB within 30 days from the end of the month of deduction, and hand the seller a Form 16B certificate. The tax is the buyer’s legal responsibility, not the seller’s, and it is calculated on the sale consideration or the stamp-duty value, whichever is higher.

This catches many first-time buyers by surprise: you cannot simply pay the full price to the seller and settle up later. You pay the seller 99% and route the remaining 1% to the government in the seller’s name. Get the mechanics wrong and the interest, late-filing fee, and penalty land on you, the buyer — so this guide walks through every step, deadline, and edge case for 2026.

When does Section 194-IA apply? The Rs 50 lakh threshold

Section 194-IA applies whenever the consideration for the property, or its stamp-duty value, is Rs 50,00,000 (Rs 50 lakh) or more. If both the consideration and the stamp-duty value are below Rs 50 lakh, no TDS is due at all. The section covers buildings, flats, and land — but expressly excludes agricultural land.

Two points trip people up. First, the threshold is not “the price you negotiated” — it is the higher of the price and the government’s stamp-duty (ready-reckoner) value. A flat agreed at Rs 48 lakh can still cross the line if its ready-reckoner value is Rs 52 lakh. Second, the 1% is deducted on the whole value, not just the amount above Rs 50 lakh. There is no basic exemption slab here.

What is the 1% calculated on — price or ready-reckoner value?

The 1% is calculated on the sale consideration or the stamp-duty value, whichever is higher. This “whichever is higher” basis was inserted by the Finance Act 2022 with effect from 1 April 2022, aligning Section 194-IA with the anti-undervaluation logic already in Sections 50C and 56(2)(x). Before that, TDS was computed only on the stated consideration.

Here is how the arithmetic plays out in the three situations buyers most often face:

Scenario Agreement value Stamp-duty value TDS applies? 1% TDS deducted
Standard purchase Rs 80,00,000 Rs 78,00,000 Yes (≥ Rs 50L) Rs 80,000 (on Rs 80L)
Ready-reckoner higher than price Rs 48,00,000 Rs 55,00,000 Yes (higher value ≥ Rs 50L) Rs 55,000 (on Rs 55L)
Both values below threshold Rs 46,00,000 Rs 49,00,000 No Nil

In the standard Rs 80 lakh case, you pay the seller Rs 79,20,000 and deposit Rs 80,000 with the government against the seller’s PAN. The seller later claims that Rs 80,000 as a credit when filing their own income-tax return.

Buying jointly? The October 2024 aggregate-consideration rule

From 1 October 2024, where a property has more than one buyer or more than one seller, the consideration is the aggregate of all amounts paid by all buyers to all sellers — so individual sub-Rs 50 lakh shares no longer escape TDS. This was fixed by a proviso to Section 194-IA(2) inserted by the Finance (No. 2) Act 2024 (Clause 58).

The change closed a loophole. Earlier, a couple buying a Rs 90 lakh flat at Rs 45 lakh each could argue that neither share crossed Rs 50 lakh, so no TDS was due. That reading is now expressly blocked: the department looks at the Rs 90 lakh aggregate, confirms it is over the threshold, and each buyer deducts 1% on their own share and files a separate Form 26QB. In the Rs 90 lakh, 50:50 example, each spouse files Form 26QB for their Rs 45 lakh share and deposits Rs 45,000.

How to file Form 26QB: step-by-step

Form 26QB is a combined challan-cum-statement filed and paid online — you do not need a TAN, only the PAN of both the buyer and the seller. The process runs entirely on the Income-tax e-filing portal:

  1. Log in to the Income-tax e-filing portal and open e-Pay Tax → New Payment → “TDS on Sale of Property (Form 26QB)”.
  2. Select whether you are buying from a resident, and confirm the number of buyers and sellers (this drives the aggregate-consideration rule above).
  3. Enter the PAN of the buyer and the seller, the property address, the agreement date, the total consideration, and the stamp-duty value.
  4. The portal computes 1% of the higher value as the tax payable. Verify the figure against your own calculation.
  5. Pay online (net banking, debit card, or over-the-counter via the generated challan) and save the acknowledgement.
  6. After a few days, register on TRACES as a taxpayer and download Form 16B — the TDS certificate you must give the seller.

File a separate Form 26QB for each buyer-seller pairing. Two buyers and one seller means two Form 26QBs; one buyer and two sellers means two as well.

Form 16B — the certificate you must give the seller

Form 16B is the TDS certificate that proves you deposited the 1% against the seller’s PAN, and you must download it from TRACES and issue it to the seller within 15 days of the Form 26QB due date. Without it, the seller cannot cleanly claim credit for the tax you deducted, and disputes at handover are common when it is skipped.

Practically, sellers increasingly ask for Form 16B before releasing possession or the final no-dues letter, so treat it as part of closing — not an afterthought weeks later.

Deadlines and penalties at a glance

Every obligation under Section 194-IA is date-stamped. Missing a date shifts the cost onto the buyer, so keep this table beside your closing checklist:

Obligation Deadline / rate What triggers a cost
Deduct 1% TDS At payment / credit to seller Interest at 1% per month for non-deduction
Deposit via Form 26QB Within 30 days from end of the month of deduction Interest at 1.5% per month for late deposit
Issue Form 16B to seller Within 15 days of the 26QB due date Seller cannot claim TDS credit smoothly
Late filing of Form 26QB — Fee of Rs 200 per day under Section 234E
Seller has no PAN TDS at 20% (not 1%) Higher deduction under Section 206AA

On top of the above, a penalty of up to Rs 1,00,000 can apply under Section 271H for failure to file the statement. These are avoidable costs — none of them arise if you deduct, deposit, and certify on time.

When 194-IA does NOT apply: NRI sellers and Section 195

If the seller is a Non-Resident Indian (NRI), Section 194-IA and its comfortable 1% rate do not apply — the buyer must instead deduct TDS under Section 195, at rates far higher than 1%. This is the single most expensive mistake a buyer can make: deducting 1% from an NRI seller leaves you exposed for the shortfall, because the responsibility to deduct the correct amount is yours.

The Section 195 regime has its own mechanics — TDS on the capital gain, a TAN requirement, and Form 27Q instead of Form 26QB. We cover it in full in our dedicated guide to tax, TDS and repatriation when an NRI sells property in India, so this guide stays focused on the resident-seller case.

“Buyers treat TDS as the seller’s paperwork. It isn’t. Under 194-IA the liability sits with the buyer, so the day you deduct 1% you have taken on a compliance duty with hard deadlines. On a Rs 80 lakh purchase that is Rs 80,000 you are personally answerable for — file the 26QB, download the 16B, and keep both with your title papers. It costs nothing to do on time and a great deal to fix late.”

— Girish Chhalwani, Founder & CEO, THE EDGE Developments

Frequently asked questions

Is TDS calculated on the property price or the ready-reckoner value?

It is calculated on the higher of the two. Since 1 April 2022, Section 194-IA charges 1% on the sale consideration or the stamp-duty (ready-reckoner) value, whichever is higher. So if your agreement value is Rs 48 lakh but the ready-reckoner value is Rs 55 lakh, you deduct 1% of Rs 55 lakh.

I’m buying with my spouse — do we each deduct TDS or just once?

Since 1 October 2024, joint buyers are assessed on the aggregate consideration. If the combined value is Rs 50 lakh or more, each co-buyer deducts 1% on their own share and files a separate Form 26QB. A Rs 90 lakh flat split 50:50 means each spouse deposits Rs 45,000 — the sub-Rs 50 lakh individual shares no longer exempt you.

What happens if the seller doesn’t give me their PAN?

If the seller does not furnish a valid PAN, you must deduct TDS at 20% instead of 1%, under Section 206AA. PAN of both the buyer and the seller is mandatory on Form 26QB, so obtain the seller’s PAN in writing before you close.

Do I need a TAN to deduct TDS on a property purchase?

No. Section 194-IA specifically waives the TAN requirement for property buyers — you use your own PAN to file Form 26QB. A TAN is only needed in the separate case where the seller is an NRI and Section 195 applies.

My property is Rs 49 lakh — do I still need to deduct TDS?

Only if the stamp-duty value is Rs 50 lakh or more. If both the agreement value and the ready-reckoner value are below Rs 50 lakh, no TDS is due. But check the ready-reckoner value first, because it often exceeds the negotiated price and can pull you over the threshold.

The seller is an NRI — is the TDS still 1%?

No. When the seller is a Non-Resident Indian, Section 194-IA does not apply and the 1% rate is irrelevant. You must deduct under Section 195 at much higher rates, obtain a TAN, and file Form 27Q. See our separate NRI-seller guide for the full procedure.

When is Form 26QB due, and what is the penalty if I file late?

Form 26QB and the tax payment are due within 30 days from the end of the month in which you deducted the TDS. Late deposit attracts interest at 1.5% per month, late filing carries a fee of Rs 200 per day under Section 234E, and a penalty of up to Rs 1,00,000 can apply under Section 271H.

Buying a plot or villa near Mumbai?

THE EDGE Developments handles the full compliance trail — title, stamp duty, TDS, and registration — on every branded plotted and villa purchase, so nothing slips between agreement and possession. Explore our branded plots and villa developments, or talk to our land-investment team.

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Citations & sources

Dark hero image with the title 'Developer vs Land Aggregator, Who to Trust' overlaid; logo 'The Edge' bottom-right, conveys article topic.
CategoriesMarket Insights

Real Estate Developer vs Land Aggregator vs Broker: Who Should You Actually Trust?

By Girish Chhalwani,

THE EDGE — Direct Answer

In India’s land market, three entities sell property: a RERA-registered developer, a land aggregator, and a broker — each with fundamentally different accountability. A RERA developer is your safest option: they maintain a mandatory escrow account holding 70% of buyer payments, have a legally binding possession date, and are answerable to MahaRERA. A land aggregator operates in a regulatory grey zone — they pool parcels from multiple owners and often sell before NA conversion or RERA registration is complete, leaving your money unprotected. A broker is a commission-paid intermediary who works for the developer, not you — never rely on them for due diligence. The rule: only pay a developer with a valid MahaRERA registration number. Verify it independently on maharerait.maharashtra.gov.in before paying any amount, including a token.

TL;DR — KEY TAKEAWAYS

  • Three sellers exist: a RERA developer (full legal accountability), a land aggregator (grey zone, little protection), and a broker (commission-driven, no accountability).
  • Only a RERA-registered developer offers escrow, binding delivery dates, and MahaRERA recourse.
  • A broker works for the developer’s commission — never expect them to do your due diligence; hire your own advocate.
  • Never pay before RERA registration is complete and active — it is illegal for a developer to take bookings first.

In India’s land market, you will encounter three types of entities selling you plots: a RERA-registered developer, a land aggregator, and a broker. Each has a fundamentally different accountability structure, legal standing, and incentive system. Understanding who you are dealing with — and what that means for your protection — is the single most important buyer intelligence decision. This guide breaks down each role, what they can and cannot do for you, and who to trust with your money.

Reading time: 12 minutes | Last updated: July 2026 | Author: Girish Chhalwani, Founder & CEO, THE EDGE Developments

The land aggregator model is the grey zone of Indian real estate — not quite a developer, not quite a broker, not always RERA-registered, and often not legally accountable in the way a registered developer is. Buyers who confuse a land aggregator with a RERA developer consistently end up with the same problems: delayed possession, incomplete amenities, and no legal recourse. — Girish Chhalwani, THE EDGE Developments

What is the difference between a developer, aggregator, and broker?

A RERA developer builds and sells with full legal accountability and escrow; a land aggregator pools parcels and sells plots in a regulatory grey zone; a broker is a commission-paid intermediary with no accountability to you. The table shows how they differ.

Role What They Do RERA Registration Legal Accountability
RERA-Registered Developer Buys land, obtains all approvals (NA, layout sanction, RERA registration), develops and sells plots with full legal infrastructure Mandatory (for projects above threshold) Full — bound by RERA Act, escrow obligation, delivery commitments
Land Aggregator Pools together multiple private land parcels and sells them as a “project” — often without full development infrastructure or RERA registration Often absent or selective Limited — operates in regulatory grey zone; may or may not have RERA
Broker / Channel Partner Facilitates transactions between buyers and sellers or developer projects; earns commission from developer or seller Must be RERA-registered (RERA Agents) for registered projects None — broker is not a principal to the transaction

What does a RERA-registered developer actually guarantee?

A RERA-registered developer has verified land title, approvals in place, a mandatory escrow account, a legally binding possession date, quarterly progress reporting, and a MahaRERA grievance route. This is your gold standard.

  • Land ownership verified: MahaRERA verifies the developer has clear title or development rights over the project land
  • Approvals in place: Layout sanction, NA conversion, environmental clearance, and other approvals must be submitted at registration
  • Escrow account mandated: 70% of buyer payments go into a designated escrow — withdrawable only in proportion to construction completion
  • Possession date committed: A legally binding possession date with penalty for delay
  • Quarterly progress reporting: The developer must update MahaRERA quarterly on construction progress
  • Grievance mechanism: Buyers can file complaints with MahaRERA and seek compensation

Every plot you buy should be in a RERA-registered project from a developer with a verified track record.

Why is the land aggregator grey zone dangerous?

Land aggregators assemble parcels from multiple owners and often start selling before NA conversion, layout approval, or RERA registration are complete — funding the legal process with your money and leaving you without escrow protection or a binding delivery date.

How They Work

Land aggregators typically:

  • Identify agricultural or NA land from multiple village owners
  • Sign MOUs or option agreements with those landowners
  • Begin marketing and selling “plots” in the assembled parcel before completing all legal approvals
  • Use collected buyer funds to complete NA conversion, layout approvals, and other formalities — essentially funding the legal process with your money

Why This Is Risky

  • NA conversion not complete at booking: You pay for a “NA plot” that is still agricultural land
  • No RERA registration: Your money is not protected by escrow; there is no legally binding delivery date
  • Landowner disputes: The aggregator’s MOU with original landowners may not survive disputes — you could end up with a plot whose underlying ownership is contested
  • No legal recourse: Without RERA registration, you cannot file a MahaRERA complaint; you must approach civil courts (expensive and slow)

How to Identify a Land Aggregator (Not Developer)

  • Cannot provide a MahaRERA RERA registration number
  • Shows “under process” for NA conversion or layout approval
  • Agreement is an MOU or “Expression of Interest” rather than a registered Agreement for Sale
  • Multiple landowners’ names appearing in the title documentation for different plots
  • No mention of escrow account in payment terms

What can a broker do — and what can’t they?

A broker (Channel Partner) is a sales intermediary paid 1–3% commission by the developer or seller. Their incentive is to close the sale, not protect you — so never expect them to do your legal due diligence.

What a RERA-Registered Agent Can Do

  • Show you RERA-registered projects and provide accurate project information (as disclosed by developer on RERA portal)
  • Facilitate introductions, site visits, and documentation collection
  • Earn the developer’s agreed commission

What a Broker Cannot Do — and You Should Not Expect Them To

  • Guarantee the developer’s delivery — the broker has no legal accountability for that
  • Perform independent legal due diligence on your behalf — they are not your advocate
  • Represent your interests in a dispute — they work for the developer’s commission
  • Be held responsible if the project fails or the developer misrepresents

RERA Agent Registration

Under RERA, real estate agents who facilitate sales in RERA-registered projects must themselves register with MahaRERA. If a broker is selling a RERA project, verify their RERA agent registration number. Unregistered agents operating in RERA projects is itself a violation.

Who should actually get your money? The trust hierarchy

In order: a track-record RERA developer first; a clean-title private NA plot with independent verification second; a land aggregator only with deep legal scrutiny; and never a pre-RERA, pre-approval offer.

  1. RERA-registered developer, verified track record, MahaRERA-compliant project — Maximum trust, maximum protection. This is where your money belongs.
  2. Private NA plot with clear title, 30-year title search, independent advocate verification — Acceptable if legal process is rigorous. No RERA protection, but clean title reduces risk.
  3. Land aggregator with partial approvals, no RERA — High risk. Avoid unless you have deep independent legal verification and are comfortable with the regulatory exposure.
  4. Pre-launch, pre-RERA registration, pre-approval offers — Do not pay. Booking before RERA registration is a RERA violation by the developer and exposes you to full default risk.

What should you ask any land seller before paying?

Ask for the MahaRERA number, the committed possession date, the original NA order, the escrow account details, past delivery records, and whether you can appoint your own advocate. Verify each independently.

  1. What is your MahaRERA registration number? (Verify independently on maharerait.maharashtra.gov.in)
  2. What is the possession date committed on the RERA registration?
  3. Is the land NA-converted? Show me the original NA order.
  4. What is the escrow account number and which bank holds it?
  5. What are your previous completed projects? Can you show me delivery records?
  6. Who is your legal advocate for this project? Can I appoint my own?

Frequently Asked Questions

What is the difference between a developer and a land aggregator in India?

A RERA-registered developer has full legal approvals, mandatory escrow, binding delivery commitments, and regulatory accountability under RERA. A land aggregator assembles land from multiple owners and sells plots — often without complete approvals or RERA registration, operating in a legal grey zone with far less buyer protection.

Can I trust a real estate broker to do due diligence on my behalf?

No — a broker’s incentive is to earn their commission from the developer or seller. They are not your fiduciary. Always hire an independent property advocate who is paid by you alone for legal due diligence. Never rely on the developer’s or broker’s recommended advocate.

What is RERA agent registration and why does it matter?

Under RERA, real estate agents who facilitate sales in RERA-registered projects must themselves be registered with the state RERA authority. Verify your broker’s RERA agent number on maharerait.maharashtra.gov.in. An unregistered agent operating in RERA projects is violating RERA law.

Is it safe to book a plot before RERA registration is completed?

No — it is actually illegal for a developer to accept bookings before RERA registration is complete. Any payment before RERA registration gives you zero regulatory protection. If the project subsequently fails to register (or registers with different terms), you have only civil court recourse. Always verify RERA registration is complete and active before paying any amount, including token.

About the Author — Girish Chhalwani

Girish Chhalwani is the Founder & CEO of THE EDGE Developments, a RERA-registered plotted-development company in the Karjat–MMR corridor. With 20+ years in Maharashtra land acquisition, NA conversion, and infrastructure-led land investment, he advises HNI and NRI investors on land strategy near Mumbai.

· About THE EDGE Developments

Buy from a RERA-Registered Developer You Can Verify

THE EDGE Developments is a RERA-registered developer with NA-converted plots, escrow-backed payments, and full documentation in the Karjat corridor. Ask us for our MahaRERA number and delivery track record before you decide.

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NRI family with property-sale papers and a wire-transfer receipt — NRI selling property in India, tax and repatriation
CategoriesNRI Guides

NRI Selling Property in India: Tax, TDS, Repatriation and How to Bring Money Home

By Girish Chhalwani,

THE EDGE — Direct Answer

When an NRI sells property in India, the buyer must deduct TDS before paying — approximately 13–18% for long-term capital gains (property held 24+ months) or 30%+ for short-term gains. The most important step is applying for a Lower Deduction Certificate (Form 13) before the sale to prevent excess TDS from being locked up for 8–12 months in a refund cycle. After the sale, file an Indian Income Tax Return to claim Section 54F exemption (reinvest in residential property) or Section 54EC (invest up to ₹50 lakh in NHAI/REC bonds within 6 months). To repatriate sale proceeds abroad, submit Form 15CA and 15CB to your Indian bank — up to USD 1 million per year from an NRO account, unlimited from an NRE account. Total processing typically takes 5–15 business days.

TL;DR — KEY TAKEAWAYS

  • The buyer must deduct TDS of ~13–18% (LTCG) or 30%+ (STCG) before paying an NRI seller.
  • Apply for a Lower Deduction Certificate (Form 13) BEFORE the sale to avoid locking up cash in excess TDS.
  • Repatriate via Form 15CA/15CB — up to USD 1M/year from an NRO account, unlimited from an NRE account.
  • File an Indian ITR even if TDS was fully deducted, to claim refunds and Section 54F/54EC exemptions.

When an NRI sells property in India, the buyer must deduct TDS (Tax Deducted at Source) at 12.5–23% before paying — and the NRI must file an Indian Income Tax Return to claim any excess refund. After tax compliance, repatriation of sale proceeds to your overseas account is governed by RBI rules. This guide walks through the entire process — from sale to wire transfer abroad.

Reading time: 13 minutes | Last updated: July 2026 | Author: Girish Chhalwani, Founder & CEO, THE EDGE Developments

The most common mistake NRI property sellers make is not applying for a Lower TDS Certificate before the sale. If the buyer deducts 20–23% TDS at source and the NRI’s actual tax liability is only 12.5%, they must wait 8–12 months for an ITR refund. A Lower Deduction Certificate from the Income Tax Department, applied for before the sale, allows TDS to be deducted at the actual liability rate — dramatically improving cash flow. — Source: Income Tax Department Circular, NRI TDS Guidelines 2024

What is the step-by-step process for an NRI to sell property in India?

Five steps: calculate your capital gains tax, apply for a Lower TDS Certificate before selling, execute the registered sale, file your Indian ITR, and repatriate the proceeds using Form 15CA/15CB. Doing them in this order protects your cash flow.

Step 1: Determine Capital Gains Tax Liability

Before anything else, calculate what you owe:

  • LTCG (held 24+ months): 12.5% flat rate on gains (post-Budget 2024); no indexation for properties acquired after July 23, 2024
  • STCG (held under 24 months): Taxed at applicable income slab rate (30% at highest bracket + surcharge + cess)
  • Add surcharge (10–37% of tax depending on gain amount) and cess (4%) to arrive at effective rate

Step 2: Apply for Lower TDS Certificate (Form 13) — Do This First

Before the sale, apply to the Income Tax Department for a Lower Deduction Certificate under Section 197. This certificate specifies the TDS rate applicable based on your actual tax liability — preventing over-deduction.

Timeline: Apply 30–60 days before expected sale date. Income Tax Department typically processes in 2–4 weeks.

Documents required: PAN, calculation of capital gain, purchase documents, sale agreement draft

Without this certificate: buyer deducts TDS at default NRI rates (significantly higher than actual liability in many cases).

Step 3: Execute the Sale

  • Agree on sale price and terms with buyer
  • Execute registered Agreement for Sale (AFS)
  • Buyer deducts TDS (as per Lower Deduction Certificate or standard rates) and deposits with Income Tax Department via Challan 26QB
  • Buyer provides TDS certificate (Form 16B) to seller
  • Execute and register Sale Deed at Sub-Registrar office in India (NRI can attend in person or via registered POA)

Step 4: File Indian Income Tax Return (ITR)

NRI sellers must file ITR in India for the financial year of sale — even if all tax was deducted at source. Benefits of filing:

  • Claim refund of any excess TDS deducted
  • Claim Section 54F exemption (if reinvesting in residential property)
  • Claim Section 54EC exemption (if investing in NHAI/REC bonds)
  • Provide documentation for repatriation clearance

File ITR before July 31 of the assessment year following the sale. You can file online through incometax.gov.in.

Step 5: Repatriate Funds from India to Abroad

What can be repatriated:

  • Sale proceeds from the sale of immovable property (up to 2 residential properties per NRI per year)
  • Repatriation limit: USD 1 million per financial year for NRO account (which includes all sources)
  • From NRE account: freely repatriable with no upper limit

Documents required for repatriation:

  • Form 15CA (self-declaration) and Form 15CB (CA certificate) — uploaded to Income Tax portal
  • Proof of property ownership and sale
  • Evidence that TDS was deducted/paid (Form 16B / Challan 26QB receipt)
  • ITR filing acknowledgement for the relevant year
  • Original FIRC(s) from the purchase — proving original funds were remitted from abroad

What TDS rates apply to NRI property sellers in 2026?

For LTCG, TDS runs ~13% to ~18% of the sale value depending on the surcharge band; for STCG it starts at 30% and can exceed 42%. A Lower Deduction Certificate reduces this to your actual liability.

Sale Type Standard TDS Rate Effective Rate with Surcharge & Cess
LTCG (held 24+ months, sale consideration ≤₹50L) 12.5% ~13.0%
LTCG (sale consideration ₹50L–₹1Cr) 12.5% + 10% surcharge ~14.3%
LTCG (sale consideration ₹1Cr–₹2Cr) 12.5% + 15% surcharge ~15.0%
LTCG (sale consideration ₹2Cr–₹5Cr) 12.5% + 25% surcharge ~16.3%
LTCG (sale consideration above ₹5Cr) 12.5% + 37% surcharge ~17.9%
STCG (held less than 24 months) 30% ~31.2% to 42.7% with max surcharge

A Lower Deduction Certificate can reduce these rates to actual liability. Consult a chartered accountant before any NRI property sale.

What exemptions can an NRI seller claim?

NRIs can claim the same LTCG exemptions as residents: Section 54F (reinvest the full sale consideration in an Indian residential property) and Section 54EC (invest up to ₹50 lakh in NHAI/REC bonds within 6 months).

Section 54F: Reinvest in Residential Property

Same as for residents: reinvest entire net sale consideration (not just gain) in a residential property within 1 year before or 2 years after sale (purchase) or 3 years (construction). Exempts entire LTCG. The new residential property must be in India.

Section 54EC: Infrastructure Bonds

Invest up to ₹50 lakh in NHAI or REC bonds within 6 months of sale. Exempt LTCG up to ₹50 lakh. 5-year lock-in period.

Can NRIs sell agricultural land they inherited?

Yes — NRIs who inherited agricultural land (or received it as a gift from a resident Indian) can sell it to a resident Indian only (not to another NRI). The sale proceeds can be credited to NRO account and repatriated within the USD 1 million annual limit after tax compliance.

Frequently Asked Questions

What TDS is deducted when NRI sells property in India?

For LTCG (held 24+ months): TDS ranges from ~13% to ~18% depending on sale value, due to surcharge on higher amounts. For STCG (held under 24 months): TDS at 30% plus surcharge and cess, which can reach 42%+. Apply for a Lower Deduction Certificate before sale to avoid over-deduction.

How does an NRI bring money to the US/UK/UAE after selling property in India?

File Form 15CA and 15CB with Income Tax portal. Submit to your Indian bank (NRO account) along with sale documents, Form 16B, ITR acknowledgement, and original FIRC from purchase. The bank will then execute the international wire transfer. Processing typically takes 5–15 business days.

How much money can an NRI repatriate from sale of property in India per year?

From an NRO account: up to USD 1 million per financial year (covering all sources including property sale proceeds). From an NRE account: unlimited repatriation (if original purchase was funded from NRE account or foreign remittance). There is no restriction on repatriation from NRE accounts.

Does an NRI need to file ITR in India when selling property?

Yes — if any capital gain arises from the sale, the NRI must file an ITR in India for that financial year. Even if TDS has been fully deducted, filing is necessary to claim exemptions (Section 54F, 54EC), claim any refund on excess TDS, and comply with Indian tax law.

About the Author — Girish Chhalwani

Girish Chhalwani is the Founder & CEO of THE EDGE Developments, a RERA-registered plotted-development company in the Karjat–MMR corridor. With 20+ years in Maharashtra land acquisition, NA conversion, and infrastructure-led land investment, he advises HNI and NRI investors on land strategy near Mumbai.

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This article is general information, not tax advice. Consult a qualified chartered accountant for your specific situation.