Lower TDS Certificate for NRI – Complete Guide to Tax Savings

Taxation in India can often be complex for Non-Resident Indians (NRIs). One of the key challenges faced by NRIs is the high rate of Tax Deducted at Source (TDS) on their income in India, especially on the sale of property, rental income, dividends, and other taxable earnings. To overcome this burden and ensure fair taxation, NRIs can apply for a Lower TDS Certificate for NRI issued by the Income Tax Department.

In this guide, we explain everything about the lower deduction certificate, lower TDS deduction certificate, and the process of obtaining a lower tax deduction certificate for NRI so you can maximize savings and stay compliant.

What is a Lower TDS Certificate for NRI?

A Lower TDS Certificate for NRI is an approval granted by the Indian Income Tax Department under Section 197 of the Income Tax Act, 1961. It allows the payer (such as a buyer of property, tenant, or company paying dividends) to deduct TDS at a lower rate than the standard rate, or in some cases, not deduct TDS at all.

This is crucial for NRIs because, without such a certificate, buyers or payers are mandated to deduct TDS at very high rates — for example, 20% to 30% on property sales — which may exceed the actual tax liability of the NRI.

Why is a Lower Deduction Certificate Important for NRIs?

Prevents Excess Tax Deduction
Standard TDS rates for NRIs are much higher than residents. A lower deduction certificate for NRI ensures that only the rightful amount of tax is deducted.
Improves Cash Flow
By avoiding unnecessary excess deduction, NRIs can retain more funds in hand, especially while selling high-value assets like property.
Eliminates Refund Delays
Without a certificate, NRIs often end up filing returns to claim refunds of excess TDS, which may take months. A lower TDS deduction certificate for NRI avoids this hassle.
Ensures Compliance
It helps NRIs remain compliant with Indian tax laws while minimizing tax burdens.

Situations Where NRIs Need a Lower TDS Certificate

Sale of Property in India
TDS on sale by NRIs can be as high as 20%–30% on the entire sale consideration. With a lower deduction certificate for NRI, TDS can be reduced to the actual capital gains tax liability.
Rental Income
Tenants are required to deduct TDS on rent paid to NRIs. With a lower tax deduction certificate for NRI, the deduction is limited to actual taxable income.
Interest Income
Banks deduct TDS at a higher rate for NRIs. A lower TDS deduction certificate ensures correct deduction based on DTAA benefits.
Dividends & Other Payments
Dividend income is taxable for NRIs, and companies deduct TDS. With the certificate, this can be aligned with actual tax liability.

Documents Required for Lower TDS Deduction Certificate

When applying for a lower TDS certificate for NRI, the following documents are generally required:

PAN of the NRI
Passport and Visa copy
Proof of NRI status (such as residency permit or tax residency certificate)
Property details (in case of property sale)
Copy of agreement/contract for sale, rent, or payment
Computation of income and tax liability
Last year’s income tax returns (if applicable)

Process to Obtain a Lower Deduction Certificate for NRI

Application through Form 13
The NRI (or their representative) needs to file an application online in Form 13 under Section 197.
Submission to Jurisdictional Assessing Officer
The Income Tax Department reviews the application and supporting documents.
Assessment of Tax Liability
The Assessing Officer checks the estimated income and tax liability of the NRI for the financial year.
Issuance of Certificate
Based on evaluation, a lower tax deduction certificate for NRI is issued, mentioning the rate of TDS applicable.
Submission to Payer
The certificate must be given to the buyer, tenant, or payer, who can then deduct TDS at the reduced rate specified.

Benefits of Lower TDS Deduction Certificate for NRIs

Reduces TDS from 20%–30% to actual applicable rate
Saves NRIs from blocked funds and refund claims
Ensures proper compliance with Indian tax laws
Provides peace of mind during transactions such as property sales
Facilitates smooth financial planning for NRIs investing in India

Common Challenges NRIs Face Without This Certificate

Higher TDS deducted on full sale value, even if actual gain is small
Difficulty in claiming refunds, which often takes 6–12 months
Complicated compliance requirements without professional guidance
Misunderstanding of DTAA (Double Taxation Avoidance Agreement) benefits

This is why professional help from tax experts is highly recommended when applying for a lower deduction certificate for NRI.

Why Choose R Pereva & Company for Lower TDS Certificate Services?

At R Pereva & Company, we specialize in helping NRIs with lower TDS deduction certificates, international taxation, and compliance solutions. Our experienced team of Chartered Accountants ensures smooth processing of applications, accurate tax computation, and timely approval from tax authorities.

Whether you are selling property, earning rental income, or receiving dividends in India, our expert advisory ensures you pay the right amount of tax — not more, not less.

Conclusion

The Lower TDS Certificate for NRI is an essential tool for effective tax savings and smoother financial transactions in India. Without it, NRIs often face unnecessary tax deductions and refund hassles. By applying for a lower deduction certificate through professionals, NRIs can ensure accurate tax compliance, improved cash flow, and stress-free financial planning.

If you are an NRI looking to sell property, rent it out, or receive other income in India, applying for a lower TDS deduction certificate for NRI is the smartest move to safeguard your earnings.