Selling Your Indian Flat? The Buyer Just Became Your Tax Problem.

Here's the scenario nobody prepares you for. You bought a flat for ₹50 lakh. You're selling it for ₹2 crore. Your capital gain is ₹1.5 crore. At 12.5% LTCG, your tax should be about ₹18.75 lakh.

But the buyer doesn't deduct TDS on your gain. They deduct on the FULL sale price. 12.5% of ₹2 crore = ₹25 lakh. That's ₹6.25 lakh more than your actual tax liability — held by the government until you file your ITR and get a refund. Which takes 3-6 months. Maybe longer.

For inherited properties where the original cost was ₹5 lakh forty years ago, the over-deduction is even worse.

The fix exists: Form 13. It's an application to the Income Tax Department for a lower TDS certificate. You show them: here's my purchase cost, here's the sale price, here's the actual gain, deduct TDS only on that. Takes about 4 weeks to process. But you must apply BEFORE the sale — you can't do it retroactively.

Until July 2024, NRIs selling property paid 20% LTCG but could adjust the purchase price for inflation using the Cost Inflation Index. A flat bought for ₹10 lakh in 2005 would have an indexed cost of roughly ₹35 lakh — massively shrinking the taxable gain.

Budget 2024 killed indexation. Now it's a flat 12.5% rate, but on the RAW purchase price without any inflation adjustment.

For recently purchased properties, this is actually better (lower rate, indexation didn't help much). For properties held 15-20+ years, the new rule can mean MORE total tax despite the lower percentage. The old ₹10 lakh cost stays at ₹10 lakh — no inflation bump to ₹35 lakh.

Run the numbers both ways before selling. If you acquired before 2001, you can use the Fair Market Value as of April 1, 2001 as your cost — that's a partial relief. But for anything bought between 2001-2010 at low prices, the indexation removal stings.

When an NRI sells property, the buyer becomes the tax collector. They must: get a TAN, deduct TDS at 12.5%, deposit it using Form 26QB within 30 days, and issue you a TDS certificate.

Most Indian buyers have never done this before. They don't know they need a TAN. They don't know about 26QB. Some refuse to comply because it's “too complicated.” Deals fall through because buyers simply don't want the hassle of buying from an NRI.

Worst case: some buyers try to show a lower sale price in documents to reduce TDS. That creates legal risk for both parties — undervaluation is a red flag the tax department actively hunts.

And then there's the GPA problem. NRIs who gave someone a General Power of Attorney to “manage” their property have lost it entirely — the GPA holder sold it without consent, mortgaged it, or transferred it to their own name. The Supreme Court's Suraj Lamp ruling (2012) says GPA-based sales aren't valid title transfers. Always use a Special Power of Attorney with specific, limited authority. Get it attested at the Indian Embassy.