Form 13 for NRIs: How to Apply for Lower TDS in India

Are you tired of losing big chunks of your Indian income to TDS?

If you are an NRI with financial ties to India, chances are you know the mixed feeling that comes with those connections. On one hand, there’s pride in owning a home, earning rent from property, or watching your investments grow. However, on the other hand, there’s the shock of seeing 12.5% to 30% of your hard-earned income deducted upfront as Tax Deducted at Source (TDS), often on the entire transaction amount instead of just the actual taxable income.

This is where Form 13 under Section 197 of the Income Tax Act becomes important. By applying online, you can obtain a lower or nil TDS certificate, ensuring tax is deducted only on your actual income or gains, not on the inflated gross value. Consequently, it helps you preserve cash flow so your funds remain available for reinvestment in India, repatriation abroad, or personal use without unnecessary delays.

The application, however, is not always straightforward. It requires detailed income projections, supporting documentation (like computation of capital gains, past tax returns, and property papers), and filing within strict timelines. Missing even a single step can delay approval or lead to rejection. Therefore, many NRIs turn to professionals or a CA specializing in NRI taxation who understand the process thoroughly. With expert guidance, you can avoid weeks of follow-ups and ensure your application moves ahead without unnecessary hurdles.

If you want to keep your funds free and reduce TDS legally, this is where the right support makes all the difference. Connect with our tax experts or a CA specializing in NRI taxation for complete assistance.
Click here to chat with an expert and get started today.

Click here to chat with an expert and get started today.

What is Form 13 for NRIs?

Under Section 197 of the Income Tax Act, Form 13 is an online facility that allows NRIs to apply for a certificate of lower or nil TDS deduction on income earned in India. Since 2021, the process has been shifted to the TRACES portal (TDS Reconciliation Analysis and Correction Enabling System) and handled through a faceless, online system by the Assessing Officer.

Once approved, the certificate specifies the reduced rate of TDS and is valid either for the entire financial year or for a particular transaction.

This provision is especially useful during property sales under the new LTCG regime effective from July 23, 2024. For NRIs, the buyer must deduct TDS on the entire sale value, even if the actual taxable capital gain is much lower. With Form 13, tax is deducted only on the net capital gains, not on the gross sale consideration.

The Truth Behind TDS vs. Your Actual Tax Liability

Ever wondered why the TDS cut feels way higher than the actual tax you owe? This mismatch happens because standard TDS rates assume your full income is taxable, without considering your specific situation. In reality, many NRIs end up with a much lower tax liability, and sometimes no liability at all.

Factors that affect your actual tax liability include:

• Losses in the current year – if you’ve made a loss on investments or property, your taxable income could be much lower.
  
• Carried-forward losses – losses from previous years can be adjusted against current gains.
  
• Exemptions and deductions – provisions like Section 54 (property reinvestment), Section 80C, or DTAA relief can significantly reduce your tax bill.

Yet even with these factors, TDS still gets deducted upfront at the full applicable rate. As a result, you face refund hassles, your cash flow gets locked, and you end up waiting far longer than necessary.

This is exactly why Section 197 exists. By applying for a Lower or Nil TDS Certificate through Form 13, you ensure tax is deducted only on what you truly owe. Nothing extra is blocked, and your money stays available for personal use.

When Can NRIs Apply for Lower or Nil TDS?

Below is a simplified, NRI-relevant list of income types for which NRIs can apply for a Lower or Nil TDS Certificate under Section 197 (Form 13):

For NRIs, the threshold exemptions that apply to residents are not available. Thus, TDS is deducted on the entire income starting from the first rupee, whether it is rent, dividends, interest, or property sale proceeds.

To avoid excess tax deduction at source and the long wait for refunds, NRIs can apply for a Lower or Nil TDS Certificate (Form 13 under Section 197). This ensures tax is withheld only up to the actual liability and not at the higher default rates.

How Form 13 Can Keep More Money in Your Pocket

Let’s say you sell a property in India for ₹2 crore. The property was purchased for around ₹1.2 crore.

Step 1: Calculate Your Profit

Profit (Capital Gain) = Sale Price – Purchase Price = ₹2 crore – ₹1.2 crore = ₹80 lakh

Long-Term Capital Gain (LTCG) – Property held more than 24 months

• Tax rate for NRIs = 12.5%
  
• Tax on profit = ₹80 lakh × 12.5% = ₹10 lakh
  
• Surcharge: Since the total income in India from this property sale is over ₹50 lakh, a 10% surcharge applies on the tax. This means 10% of ₹10 lakh = ₹1 lakh.
  
• Add 4% Health & Education Cess = ₹10 lakh × 4% = ₹40,000
  
• Total LTCG Tax = ₹10 lakh + ₹1 lakh + ₹44,000 = ₹11.44 lakh

Short-Term Capital Gain (STCG) – Property held 24 months or less

• Taxed at normal NRI income tax slabs, which can go up to 30% + surcharge + cess
  
• For ₹80 lakh profit, total tax could be around ₹26 lakh, depending on your slab

Step 2: TDS Without Form 13

When you sell property, the buyer is required to deduct TDS on the full sale price, not just your actual profit.

• Sale Price: ₹2 crore
  
• TDS Rate for this bracket (₹1 crore to ₹2 crore, including surcharge & cess): 14.95%
  
• TDS Deducted by Buyer: ₹2 crore × 14.95% = ₹29.9 lakh

Compare with your actual LTCG tax: ₹11.44 lakh

Excess TDS blocked: ₹29.9 lakh − ₹11.44 lakh = ₹18.46 lakh

For Short-Term Capital Gains, TDS on the full sale price could be much higher, potentially up to ₹60 lakh, depending on your income slab, surcharge, and cess.

Now here’s the problem: A large portion of your money is frozen with the tax department for 12–18 months, even though your real tax liability is much lower.

Step 3: TDS With Form 13

• Apply for a Lower or Nil TDS Certificate (Form 13) before the sale
  
• The Assessing Officer can instruct the buyer to deduct TDS only on actual capital gains:
  
  • For LTCG: You pay only ₹11.44 lakh instead of ₹29.9 lakh.
  • For STCG: TDS is calculated based on your actual income slab, surcharge, and cess.

Benefits of Using Form 13

• Keep your money free for reinvestment in India
• Cover family expenses
• Repatriate funds abroad without waiting month
  

Not sure if you qualify? Start a quick chat with our NRI tax experts and get clear answers before your next transaction.

When Should NRIs Apply for Form 13?

The timing of your Form 13 application can make a huge difference in managing your cash flow. Here are the ideal scenarios:

• At the start of the financial year (April): Applying early ensures that your lower or nil TDS certificate covers recurring income such as rent, dividends, or interest throughout the year.
  
• Before a major property sale or one-off transaction: Filing well in advance gives enough time for the certificate to be issued so the buyer can deduct TDS at the correct (lower) rate. This prevents a large portion of your funds from getting locked unnecessarily.
  
• No fixed statutory deadline, but timing matters: While there’s no official last date for submitting Form 13, experts strongly recommend applying early. Doing so ensures the certificate is ready when needed and helps you avoid excess deductions, refund delays, and compliance headaches.

Pro Tip: Always plan ahead. Early application is the simplest way to keep more of your money in your hands instead of waiting months for a refund.

Why a Lower or Nil TDS Certificate is Worth It

Form 13 is not just about reducing taxes. It gives you better financial control as an NRI. Here’s how it helps:

• Improved cash flow: Your money stays with you instead of being held back by the tax department.
  
• Fair taxation: TDS is deducted only on your actual income or gains, not on the full transaction amount.
  
• No refund delays: Avoid waiting months to get back excess TDS.
  
• Simpler compliance: The certificate aligns with Double Taxation Avoidance Agreement (DTAA) rules and Foreign Exchange Management Act (FEMA) guidelines, making repatriation smoother.
  
• Valid for one year: Once issued, the certificate usually remains effective for the entire financial year or for the specific deductor or transaction.

To know more about claiming treaty benefits and minimizing taxes further, check out our guide: “Form 10F: How NRIs Can Claim DTAA Benefits, Filing Guide for 2025.”

Conclusion

For many NRIs, tax in India feels unfair because TDS is often deducted on the entire sale value or income, not on the actual profit. This means large amounts of money get blocked unnecessarily, even though the real tax liability is much smaller. Form 13 fixes this by making sure tax is deducted only on what is truly payable.

This becomes especially important when selling property or receiving high-value income from India. The gap between the deducted amount and the actual liability can run into lakhs. By applying for Form 13 in advance, it is possible to avoid losing liquidity, skip the long wait for refunds, and stay fully compliant with Indian tax rules.

Today, the process is 100% online through TRACES and faceless assessment, so applications can be submitted from anywhere in the world without visiting the tax office.

Want clarity on how much TDS you can actually save? Click here to chat with our CA partners who specialize in NRI Form 13 applications and guide you step by step.

Frequently Asked Questions (FAQs) 

Q1: What is the difference between Form 13 and Form 13f filings?

Form 13 is for NRIs seeking a Lower or Nil TDS Certificate, while Form 13f filings typically relate to institutional investors reporting securities holdings in the US. Both involve compliance but serve different purposes.

Q2: Can NRIs apply for Form 13 multiple times in a year?

Yes, NRIs can apply for separate Lower or Nil TDS Certificates for different transactions or recurring income streams.

Q3: Is the Form 13 application online?

Yes, the process is fully online through the TRACES portal, making it convenient for NRIs anywhere in the world.

Q4: Do I need a CA for Form 13?

While not mandatory, a CA specializing in NRI taxation can help ensure accuracy, avoid delays, and optimize tax benefits.