If you’re a Non-Resident Indian (NRI) selling property in India, you’re probably aware that TDS (Tax Deducted at Source) can eat into your sale proceeds—sometimes far more than your actual tax liability. What many NRIs don’t know is that you can avoid this with a Lower Deduction Certificate for NRI sale of property, also known as Form 13.
In this article, we’ll explain what a lower deduction certificate for NRI is, how it works, the documents you need, and how to apply for a lower deduction certificate online for NRI sellers.
What is a Lower Deduction Certificate for NRI?
A Lower Deduction Certificate (LDC) is an official approval from the Income Tax Department under Section 197 of the Income Tax Act, allowing the buyer of your property to deduct TDS at a lower rate or nil, based on your actual capital gains—not the full sale price.
This is particularly useful because:
NRIs are subject to TDS at 12.5%+ surcharge and cess on the total sale value, not just the profit.
You could end up losing 13–16% of the full property value upfront, even if your gains are small.
By obtaining a lower deduction certificate for NRI, you ensure that tax is deducted only on the capital gain and not the entire sale consideration.
Effective July 23, 2024, indexation benefits are no longer available to Non-Resident Indians (NRIs) for property sales.
All NRI property disposals on or after this date will be subject to capital gains calculation without indexation benefits.
NRIs are advised to consult qualified tax advisors regarding the impact on their transactions.
Why NRIs Need It When Selling Property
Here’s a quick scenario:
Sale Price: ₹1.5 Crore
Actual Capital Gain: ₹30 Lakhs
TDS Without LDC: ~₹22.43 Lakhs (on full ₹1.5 Cr)
TDS With LDC: ~₹3.9 Lakhs (on ₹30 Lakhs)
Saving through LDC: ₹18.53 Lakhs 🙂
By applying for a lower deduction certificate for NRI sale of property, you retain more of your funds and avoid months of waiting for a tax refund.
Key Benefits of a Lower Deduction Certificate for Non-Residents
Avoid Excess TDS: TDS is deducted only on capital gains, not the total sale value.
Improve Cash Flow: Funds stay in your hands, not stuck waiting for a refund.
Simplify the Transaction: The buyer gets legal approval to deduct less tax, avoiding confusion.
Faster Settlement: Easier documentation and no refund-related delays.
Tailored Tax Rate: The Income Tax Department approves a deduction rate that matches your real liability.
Documents Required for Lower Deduction Certificate for NRI
Documents/Information Required for filing Form-13 (Lower Deduction Certificate)
REGARDING SELLERS (To be provided separately for each seller / joint sellers)
1. Copy of PAN Card
2. Copy of Aadhar Card
3. Copy of Passport (showing arrival and departure dates to/from India of last five years)
4. Residence Permit of Foreign Country, if applicable
5. Government-issued ID of Foreign Country, if applicable
6. Overseas Citizenship of India (OCI) Card, if applicable
7. Income Tax Portal Login Credentials
(If not available, a new registration can be created or password reset.)
8. Mobile Number and Email ID
9. Income Tax Returns (ITR) and Computation for the last 4 financial years
10. Current Year Income Details like source of income and an approx valueREGARDING PROPERTY TO BE SOLD:
1. Copy of Registry (Purchase)
2. Date of Purchase
3. Purchase Amount
4. Bank statement showing the payment for the payment of property.
5. Receipts Issued by the Builder, if available
6. Ledger from Builder regarding purchase of property
7. Copy of Sale Agreement
8. Approximate Date of Sale
9. Sale Value
10. Government document regarding circle value of property at the time of sale.REGARDING BUYERS (To be provided separately for each buyer)
1. Copy of PAN Card
2. Copy of Aadhar Card
3. Email ID and Mobile Number
4. TAN
Lower Deduction Certificate Time Limit
The income tax law doesn’t specify any deadline for tax officers to approve or reject your lower deduction certificate application. There’s no fixed time limit mentioned in the rules.
In practice, most tax officers process these applications within 30 days from the end of the month when you submit your application. This is the usual timeframe we see in most cases.
However, processing times can vary. Recently, we filed an application for one of our clients, and it took 2 months to receive the certificate. This shows that sometimes it may take longer than the typical 30-day period.
Our advice: Submit your application well in advance of when you need the certificate to account for any potential delays in processing.
Lower Deduction Certificate Format
How to Apply for Lower Deduction Certificate Online for NRI
Here’s a simple guide on how to apply for a lower deduction certificate online for NRI sellers:
Step 1: Access the Income Tax Portal
Log in using your PAN credentials or register if not already done
Step 2: Navigate to Form 13
From the dashboard, go to:
e-File > Income Tax Forms > File Income Tax Forms > Select Form 13
Step 3: Fill in the Details
Provide estimated total income for the financial year
Mention nature of income (capital gains from property sale)
Include buyer’s details and sale info
Add advance tax or past TDS data, if any
Step 4: Upload Supporting Documents
Refer to the checklist above and ensure all files are clear and properly labeled.
Step 5: Submit and Track
Submit the form using a digital signature or EVC (OTP)
Track the status online
Respond promptly if the Assessing Officer (AO) requests clarifications
Once approved, the certificate will specify the reduced TDS rate, which the buyer must follow.
Final Thoughts
Getting a lower deduction certificate for NRI is a smart, legal, and effective way to manage taxes when selling property in India. It prevents heavy deductions on your sale value, keeps more money in your hands, and avoids the tedious refund process.
If you’re planning to sell property soon, don’t wait. Start the process early, gather your documents, and file your application online.
Still have questions or need help with the process? Let me know—I’m here to help you apply for your lower deduction certificate smoothly and stress-free. Contact us at +91 9870525656 now
FAQs: Lower Deduction Certificate for NRI
1 How long is the certificate valid?
It’s valid for the financial year and is usually transaction-specific.
2 Can I apply again next year?
Yes, a new Form 13 must be submitted each time a sale is made.
3 Can buyers refuse to deduct at a lower rate?
No. If you provide a valid certificate, they are legally obligated to follow the approved rate.
4 Is professional help needed?
While it’s possible to file independently, many NRIs prefer to engage tax professionals due to the paperwork and follow-ups involved.
