đź’¸ How to get a Refund on Excess TDS

For many Non-Resident Indians (NRIs), selling property in India and transferring the proceeds abroad can feel overwhelming, especially with tax regulations like TDS (Tax Deducted at Source) coming into play. Here's what you need to know about TDS, why it's deducted, and how you can claim a refund if excess tax was withheld.

🧾 What is TDS in Property Sales by NRIs?

TDS (Tax Deducted at Source) is a mechanism under the Indian Income Tax Act where tax is deducted upfront at the time of transaction.

  • When an NRI sells property in India, TDS is deducted by the buyer before making the payment to the seller.
  • The current TDS rate on sale of immovable property for Non-Residents is 12.5% plus surcharge and cess resulting the effective rate range between 12.5% to 14.96%, depending upon transaction value and applicable slab.
  • This deduction ensures that tax is collected in full from the Non-Resident when the sale is concluded.

However, this deducted amount may often be higher than the actual tax liability, especially if:

  • Your capital gains are low or Nil
  • Deduction towards your cost of acquisition of the property.
  • You claim exemptions under Sections 54, 54EC, etc. on investments.

🌍 Steps for NRIs to Transfer Funds Overseas After Property Sale

  1. Sell Property in India (ensure TDS is deducted)
  2. Get Certificate (Form 15CA & 15CB) from a Chartered Accountant
    This is required for remittance and confirms tax compliance.
  3. Transfer Funds from Indian Account to Overseas Account
  4. File Income Tax Return (ITR) in India
  5. Claim Refund of Excess TDS from the Income Tax Department, if any

âś… How to Claim Refund on Excess TDS?

  1. Gather Documents – Sale Deed, Purchase Deed. TDS certificate (Form 16A), bank statements, proof of investments u/s 54 and 54EF.
  2. Compute Capital Gains – With help from a Chartered Accountant.
  3. File Your ITR – Use ITR-2 for property transactions.
  4. Track Refund Status – Via the Income Tax e-filing portal.

đź’ˇ Pro Tip for NRIs

Work with a Chartered Accountant experienced in NRI taxation to:

  • Apply for a lower TDS certificate under Section 197 (if eligible).
  • Ensure timely filing of ITR and accurate documentation to avoid refund delays.

đź“Ś Final Word

TDS is a precautionary deduction, not necessarily your final tax liability. As an NRI, you can claim a refund of any excess tax deducted during overseas transfers. With proper planning, tax filing, and documentation, you can recover what’s rightfully yours.

iCA Certify has a team of experts with 40+ years of experience helping NRIs with overseas money transfers. Their expertise ensures you stay compliant and avoid delays or errors. If you're an NRI planning to transfer funds overseas, reach out to iCA Certify for fast, reliable, and professional support.

🧾 Get Started Today

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