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Lower or Nil TDS Certificate for NRIs: How to Apply on Form 128 (Old Form 13)

When an NRI sells property, receives rent or earns other income in India, the payer must usually deduct TDS at high rates on the full amount. Often that is far more than the tax actually owed. A lower or nil TDS certificate lets the payer deduct TDS at a rate the tax department approves, based on your real tax liability. This means your money is not stuck waiting for a refund.

From 1 April 2026 the application has a new form number and section:

Before 1 April 2026 From 1 April 2026
Law Section 197, Income-tax Act, 1961 Section 395, Income-tax Act, 2025
Application form Form 13 Form 128
Rules Rule 28AA Income-tax Rules, 2026

When is the certificate worth getting?

  • Selling property: the buyer would otherwise deduct about 12.5% plus surcharge and cess on the whole sale price, even if your actual gain is small, you made a loss, or you are reinvesting under section 82, 85 or 86.
  • Rental income: TDS of 30% plus surcharge and cess on gross rent, when deductions and the 30% standard deduction would make your real tax lower.
  • Interest or other income where your total Indian income is low.

Who issues it?

The Assessing Officer (TDS) with jurisdiction over your case. You apply online through TRACES (www.tdscpc.gov.in).

Step-by-step process

  1. Register on TRACES as a taxpayer using your PAN.
  2. Fill in Form 128 online. Enter your estimated income for the tax year, the details of the deal, the payer’s (buyer’s) PAN or TAN, the expected payment and the rate you are asking for.
  3. Upload the documents:
    • PAN and passport (proof of non-resident status)
    • The purchase deed and proof of what you paid (cost of acquisition, improvements)
    • The sale agreement, or the draft agreement or MoU, with the buyer’s details
    • A capital gains calculation, ideally prepared by a CA
    • Proof of any planned reinvestment (section 82, 85 or 86)
    • Income tax returns for the last few years and proof that no tax demand is outstanding
  4. Verify the application with a digital signature or e-verification.
  5. Reply to questions promptly. The officer may ask for clarification by email or on the portal, and an unanswered question delays the application.
  6. Download the certificate from TRACES once it is issued and give it to the buyer or payer.

What the officer looks at

The officer considers your estimated tax liability for the year, taxes already paid or deducted, your filing history over recent years, and any unpaid tax demands. A clear and accurate calculation that matches the documents is what gets a certificate approved quickly.

How long does it take?

In practice, allow four to eight weeks, and longer near the end of the financial year. Plan for this before the sale agreement or the date payment is due.

Important points about how the certificate works

  • It is issued for a specific payer, for the amount and tax year stated on it.
  • It applies only to payments made after it is issued. TDS already deducted on an advance or token payment cannot be reversed with the certificate.
  • If the sale price or the buyer changes, you may need a fresh or revised certificate.

Common mistakes

  • Applying after the token amount has been paid, so full TDS applies to it.
  • Leaving earlier returns unfiled or demands unpaid. Both lead to rejections.
  • Cost figures in the calculation that do not match the purchase deed.
  • Setting the registration date before the certificate is likely to arrive.

Frequently asked questions

Is Form 13 still valid?
For payments from 1 April 2026, you apply on Form 128 under section 395 of the Income-tax Act, 2025. Form 13 belonged to the 1961 Act.

Can I get a nil TDS certificate?
Yes, if your expected tax is nil. For example, your sale may produce a loss, or the whole gain may be exempt through reinvestment.

Do I need a CA to apply?
It is not legally required, but a CA-prepared capital gains calculation and properly organised documents make approval much faster.

Does the certificate cover rental income too?
A certificate can be obtained for each payer, for example a tenant paying rent, based on your estimated income.

Planning a property sale? Garvita Jain & Co. prepares and files Form 128 applications, deals with the officer’s questions and coordinates with your buyer. Contact us here, or at contact@garvitajainandco.com or +91 98678 16597.

This article is general information based on the law as of October 2026 and is not professional advice.

Sources

Official

Professional / CA publications

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