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Guide · Checked 7 August 2026

The lower-deduction certificate — §395 and Form 128

On a property sale, tax is withheld on the sale price, not on your gain. The certificate is how that is reduced to something closer to what you will actually owe — and it only works if it exists before the buyer pays you.

Why this is the expensive one

Everything else on this site measures a few percent. This does not. Withholding on a sale by a non-resident is computed on the whole consideration, so the amount held back is set by what the property sold for rather than by what you made on it. Someone who bought decades ago and sold at a real but ordinary profit can have a sum withheld that is a large multiple of the gain.

None of it is confiscated. It is recovered by filing a return and claiming the refund — which means the money is unavailable until well after the financial year ends, and unavailable is the operative word if the point of selling was to move the proceeds.

The certificate under section 395 is the mechanism for not being in that position. It authorises the buyer to deduct at a lower rate, or at none, on the strength of a computation of what you will actually owe.

What it is, exactly

An application in Form 128, filed electronically, asking for a certificate authorising deduction at a lower or nil rate under section 395 of the Income-tax Act 2025. It is the successor to Form 13 under section 197 of the 1961 Act, renumbered on 1 April 2026 along with the rest of the framework.

An Assessing Officer decides it. That is worth reading twice: it is a decision on your facts, not a filing that completes on submission, and there is no version of this where the timetable is under your control.

Sequence

Timing is the whole mechanism

Nothing about this certificate is retroactive. Every step below is only useful if the one before it has happened.
  1. 01

    Before anything is paid, not after. The certificate authorises the payer to deduct less. A payer who has already deducted cannot un-deduct, so a certificate obtained after the payment is a certificate for the next transaction, not this one.

  2. 02

    Your Chartered Accountant computes the real liability. The gain, the cost of acquisition and whatever indexation or treaty position applies. This is the number the application argues from, and it is the reason the application is a CA's work rather than a form-filling exercise.

  3. 03

    The application goes in on Form 128. Under section 395 of the Income-tax Act 2025 — the successor to section 197, where this was Form 13. It is filed electronically, and it is made by the person whose income is being withheld against: you, the seller.

  4. 04

    The Assessing Officer issues the certificate, or does not. It is a decision, not a registration, and it takes as long as it takes. Anyone who tells you the turnaround is guaranteed is selling something. Build the wait into the sale timetable rather than into your hopes.

  5. 05

    The buyer deducts at the certified rate, and you are paid. The certificate is addressed to the deduction, so the buyer has to have it in hand at the time of payment. Then the proceeds land in the NRO account, and the way out is the remittance paperwork and the exchange rate.

The three costs

Where this sits against everything else going out

The rate checker on this site prices the smallest of the three. It is priced first because it is the one you can check in thirty seconds — not because it is the one that matters most.
Largest

The withholding

Computed on the sale price. Reduced, if at all, by a certificate obtained before the buyer pays — otherwise recovered by refund after the year ends. This page.
Blocking

The remittance paperwork

Form 145 and Form 146, which decide whether what remains may leave the country at all. Its own guide.
Smallest

The exchange rate

Typically 250–350 basis points over mid-market on a retail card rate, never itemised because it is inside the rate itself. The checker prices it exactly, from the quote you were given.

Questions

What people ask first

What replaced section 197 and Form 13?

Section 395 of the Income-tax Act 2025 and Form 128, effective 1 April 2026. Section 395(1) covers a certificate for lower or nil deduction of tax at source; section 395(3) covers lower collection. The purpose did not change — the numbering did, and most guidance online has not caught up.

Why does withholding on a property sale hurt so much more than the exchange rate?

Because it is applied to the sale price, not to the gain. A property bought long ago and sold at a modest real profit can still have a large sum withheld, since the withholding is computed on the whole consideration. An exchange-rate spread of two or three percent is measured against the same sum, but the withholding is a multiple of it.

Do I get the money back without a certificate?

In the ordinary course, over-withheld tax is recovered by filing a return for that year and claiming a refund. That is not a loss, it is a wait — but it is a wait that runs past the financial-year end, and it is money you cannot repatriate while the department is holding it.

When should the application start?

Before the sale is paid for. That is the whole timing question, and it is why this is the first thing to raise rather than the last: an application started after the buyer has deducted cannot fix that deduction, and one started close to the financial-year boundary can leave the refund a year away.

Can you apply for it on my behalf?

No. We are not Chartered Accountants and we do not file, sign or certify anything. What we do is coordinate the sequence and the timing, keep the document pack in order, and price the wire at the end of it — with the CA invoicing you directly for the work only a CA can do.

How does this connect to Form 145 and Form 146?

They are different documents at different stages. Form 128 is about how much tax is withheld from the sale. Form 145 and Form 146 are the remittance paperwork that lets what remains leave the country. A property exit needs both, in that order.

Selling, or already holding the proceeds?

The order of the pieces is the whole difficulty: the certificate before the payment, the pack before the wire, and the financial-year boundary underneath all of it. Tell us roughly what you are moving and whether the sale has completed. If we cannot help, we will say so rather than book a call.
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