Selling property in India from abroad: why the buyer deducts so much tax

If you live abroad and sell property in India, the buyer must deduct tax before paying you. This surprises many sellers, because the deduction is on the whole sale price, not on your profit.

How much is deducted

For property you have held for more than two years, the rate is 12.5% plus surcharge and cess. It applies to the full price. Say you sell for ₹1.5 crore and your real gain is ₹20 lakh. The buyer still deducts on ₹1.5 crore. You claim the extra back in your tax return, which can take many months.

The fix: a lower deduction certificate

You can ask the income tax officer for a certificate that lets the buyer deduct only on your real gain. From 1 April 2026 the application is Form 128 under the Income-tax Act, 2025. Before that it was Form 13.

• Apply before the buyer pays. A certificate cannot reverse tax already deducted.
• Each co-owner applies separately.
• You need your PAN, the purchase deed, the sale agreement, buyer details and a capital gains working from a CA.

When it may not be worth it

If you bought recently and most of the price is profit, the normal deduction may be close to your real tax. Then a certificate saves little. A CA can tell you in one conversation.