Arjun Mehta had not lived in Delhi for almost nine years.

Toronto had become home. His work, his family, his bank accounts and most of his investments were now in Canada. The Delhi apartment, meanwhile, had become little more than a property he kept because selling it had never seemed urgent.

Then the market moved.

A buyer offered Arjun ₹1.85 crore for the apartment he had purchased years earlier. The price looked attractive, the paperwork moved quickly, and after a few rounds of negotiation, both sides agreed to close the deal.

For Arjun, the calculation seemed simple.

₹1.85 crore sale price. Less expenses. Receive the balance.

He had already spoken to his Canadian accountant about the fact that he was selling an Indian property. His Indian CA would calculate the capital gain and take care of the Indian tax return.

Or so he thought.

A few days before the payment was scheduled, the buyer's representative asked one question that immediately changed the conversation:

"You are a non-resident for Indian tax purposes, correct?"

Arjun said yes.

The next sentence was the one he hadn't expected.

"Then the TDS treatment will be different."

That was the moment Arjun realised that selling an Indian property as an NRI wasn't simply a real-estate transaction.

It was a Cross-border tax transaction.

The Sale Price Was ₹1.85 Crore. But That Wasn't the Amount He Would Receive

Arjun initially assumed the buyer would deduct the standard property-sale TDS applicable to a resident seller.

That assumption can create serious problems.

For transactions involving a non-resident seller, the tax withholding framework is different from the familiar resident-property TDS mechanism. The Income Tax Department itself states that the property TDS form used for resident deductees is not applicable where the seller is non-resident.

This distinction matters because the buyer is not merely transferring money to the seller.

The buyer may have a tax deduction and reporting responsibility before making the payment.

And that means the amount appearing in the seller's bank account can be significantly different from the headline sale consideration.

For Arjun, the issue wasn't that he had suddenly become liable for an unexpected "extra tax."

The issue was that tax could be withheld at the transaction stage, before his final Indian tax liability was determined.

That is a very different experience from what most sellers expect.

The Bigger Problem: TDS Is Not the Same as Final Tax

This is where many NRIs get confused.

Arjun initially looked at the proposed deduction and thought:

"If this much tax is being deducted, does that mean I actually owe this much tax?"

Not necessarily.

TDS is a withholding mechanism. Capital gains tax is the underlying tax liability.

The final tax calculation depends on the actual facts of the transaction — including the nature and holding period of the property, acquisition cost, eligible improvement costs, transfer expenses, applicable exemptions or deductions, and the tax rules applicable to the relevant year.

The tax deducted at source can ultimately be available as tax credit, subject to the applicable rules and proper reporting.

The Income Tax Department also notes that tax deducted on sale of immovable property can appear in the taxpayer's tax records, including Form 26AS.

So Arjun's problem wasn't simply:

"How much tax do I have to pay?"

It was:

"How much should be withheld now, and what will my actual tax liability be after the complete capital-gains calculation?"

That distinction can make a huge difference to an NRI's cash flow.

Then Came the Second Surprise

Arjun had another concern.

The property had been purchased many years ago.

He had renovated the kitchen, replaced flooring, upgraded electrical systems and carried out several improvements over the years. Some invoices were available. Others weren't.

His old purchase documents were stored in India.

A few receipts were sitting in an email account he rarely used.

And some expenses were simply impossible to reconstruct.

That suddenly became important.

Because when calculating capital gains on the sale of property, the historical cost and eligible expenses can directly affect the taxable gain.

A property sold for ₹1.85 crore does not automatically mean ₹1.85 crore is taxable income.

The tax computation needs to start with the actual transaction and work through the applicable capital-gains rules.

This is why an NRI property sale should ideally be reviewed before the sale agreement is finalised, rather than after the buyer has already initiated TDS compliance.

The Toronto Factor Nobody Had Considered

There was another layer to Arjun's situation.

He wasn't just selling property in India.

He was living in Canada.

That meant the transaction potentially had implications beyond Indian taxation.

The money would eventually move from India to Canada, and Arjun wanted to understand whether the Indian tax paid or withheld would have any relevance in his Canadian tax position.

This is where Cross-border tax planning becomes important.

A transaction can be perfectly compliant in India while still requiring consideration under another country's tax rules.

For NRIs, this is particularly important because their financial life often exists across multiple jurisdictions:

• Property in India
• Bank accounts in India
• Investments overseas
• Income in the country of residence
• Tax residency outside India
• Cross-border remittances

Looking at only one side of the transaction can leave gaps.

What the Review Changed

Before the transaction was completed, Arjun's advisors reviewed the entire structure.

They started with the basics:

1. Confirm his Indian residential status

The first question was whether Arjun was actually a non-resident under the applicable Indian tax rules for the relevant year.

2. Review the property history

The original purchase documents, improvement expenses and transfer-related costs were collected and reviewed.

3. Calculate the capital gain

Instead of treating the sale value as taxable income, the transaction was analysed based on the applicable capital-gains provisions.

4. Review the TDS position

Because Arjun was a non-resident seller, the withholding mechanism applicable to the transaction had to be correctly determined.

5. Plan the cash flow

The team calculated how much money would actually be available to Arjun after withholding and transaction costs.

6. Review the cross-border angle

Since Arjun was living in Canada, the India-side tax position was considered alongside his broader international tax situation.

The result wasn't about avoiding tax.

It was about paying the right tax, at the right time, through the right process.

The TDS Surprise Wasn't the Real Problem

Looking back, Arjun realised something important.

The biggest mistake wasn't selling the property.

It wasn't even the TDS.

It was assuming that an Indian property sale was a straightforward transaction simply because the property itself was straightforward.

For an NRI, the moment the seller lives outside India, the transaction can involve additional tax and compliance considerations.

And those considerations can affect the money received at closing.

The Income Tax Department's current guidance also reflects the transition to the Income-tax Act, 2025 for transactions occurring from April 1, 2026, so the applicable rules and forms need to be checked based on the timing of the transaction.

That is particularly relevant for NRIs selling Indian property in the current tax environment.

Shunyatax's View: 
Don't Wait Until the Sale Is Done

At Shunyatax Global, we believe an NRI property sale should be treated as a tax-planning event, not just a real-estate transaction.

The most common mistake we see is waiting until the sale is completed to ask:

"How much tax will I have to pay?"

By then, the buyer may already be preparing the withholding documentation, the payment schedule may already be fixed, and important historical documents may be difficult to collect.

A better approach is to review the transaction before signing or closing the deal.

If you're an NRI selling property in Delhi, Mumbai, Bengaluru, Jaipur or anywhere else in India, our team can help review the NRI property sale tax, capital gains computation, TDS implications, documentation and broader cross-border tax position.

The goal isn't aggressive tax avoidance.

It is simple:

Understand the tax before the money moves.

Because the most expensive surprise in an NRI property sale isn't always the tax itself.

Sometimes, it's discovering the tax rules after you've already agreed to the sale.

Need help with an NRI property sale or capital gains calculation?

Shunyatax Global can assist with NRI taxation, capital gains, TDS compliance and cross-border tax advisory.