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I’m an NRI and recently sold a property in India. The buyer deducted TDS from the sale proceeds, so I assumed that my tax obligations were complete.
However, someone told me that TDS is only an advance tax deduction and that I may still need to calculate my actual capital gains tax and file an income tax return.
Does TDS settle my entire tax liability, or could I still owe additional tax? If the buyer deducted more than I owe, can I claim a refund?
This is especially important for NRIs selling property in India because the TDS deducted from the sale proceeds may be substantially higher than the final tax on the capital gain.
For example, if the buyer deducts ₹10 lakh but your final eligible tax liability is ₹6 lakh, you may be able to claim the excess ₹4 lakh as a refund, subject to the tax credit being recognized and your return being processed.
The figures are only illustrative; the actual calculation depends on your circumstances and applicable law.
TDS does not automatically mean your tax liability is finished. It is generally a tax credit that can be adjusted against your final tax liability.
For a property sale, the actual tax depends on factors such as your purchase cost, eligible expenses, holding period and applicable capital gains rules. If the TDS is less than the final tax payable, you may need to pay the difference.
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You should also check whether you are required to file an Indian income tax return for the relevant year. Having TDS deducted does not automatically remove that obligation.
Keep your sale deed, purchase documents, TDS certificate and tax credit statement. These records help you calculate the actual liability and claim any eligible refund.