₹28.6 lakh freed up-front on a ₹3 crore Mumbai flat.
A real engagement, anonymised: client details removed, industries described only generically, numbers rounded. The point is the shape of the work — what the problem looked like, what we actually did, and what it changed.
The situation
A US-resident NRI was selling a long-held Mumbai flat for ₹3 crore, with a cost of acquisition of roughly ₹2.2 crore — a capital gain of about ₹80 lakh, taxed at 12.5% plus applicable surcharge and cess without indexation under the post-23-July-2024 regime. The sale proceeds were needed in the United States, so the plan had three legs: sell, pay the right Indian tax, repatriate.
The complication
Under Section 195, a buyer paying a non-resident must withhold TDS at 12.5% plus cess (about 13%) on the entire sale consideration, not on the gain. On a ₹3 crore price that is roughly ₹39 lakh withheld — against an actual long-term capital-gains liability of only about ₹10.4 lakh on the ₹80 lakh gain. The excess of roughly ₹28.6 lakh would sit with the department until a refund landed, typically 8–14 months after filing. The buyer, worried about TDS-default exposure, would not agree to withhold anything less without paper to stand on.
The two routes
Facing roughly 13% withholding on the full sale price, an NRI seller has two options, not one. Route A — withhold now, reclaim later: let the buyer withhold the full ~₹39 lakh, file the ITR once the financial year closes, and wait for the refund — typically 8 to 14 months, with the excess ₹28.6 lakh sitting with the department in the meantime. Route B — Form 13 lower-deduction certificate: apply to the Assessing Officer before completion for a certificate fixing withholding at the actual tax on the gain rather than the full price — a process that has to start weeks ahead of the sale, but converts a year-long refund wait into money in hand at completion. The trade-off is entirely about timing and documentation effort; the final tax bill is identical either way.
What we did
- Computed the long-term capital gain from the purchase deed and capital-gains working: ₹80 lakh gain, actual tax of about ₹10.4 lakh at 12.5% plus cess.
- Prepared and filed a Form 13 lower-deduction certificate application on TRACES, supported by the sale agreement, cost working, and the seller's residency documentation — filed well ahead of the intended completion date.
- Followed up with the Assessing Officer through the clarification rounds until the certificate issued, specifying withholding at the actual capital-gains tax rather than ~13% of the headline price.
- Gave the buyer the certificate and a withholding computation to rely on, so the transaction completed with roughly ₹10.4 lakh withheld instead of roughly ₹39 lakh.
- Coordinated Form 15CB certification through a Chartered Accountant on our panel, filed Form 15CA, and moved the net proceeds from the seller's NRO account into USD under the USD 1 million per financial year repatriation route.
The outcome
- About ₹28.6 lakh received up-front at completion, instead of waiting 8–14 months for a refund of excess TDS.
- Withholding cut from roughly ₹39 lakh (~13% of the full ₹3 crore price) to roughly ₹10.4 lakh — tax on the actual ₹80 lakh gain.
- Proceeds repatriated to the US with Form 15CA/15CB in place, in the same financial year as the sale.
Run your own numbers with the NRI property TDS & Form 13 estimator, or read the full NRI property guide.