Paying TDS at full rates when your actual tax liability is lower is a cash flow problem, not a compliance requirement. Form 128 exists precisely for this — to let the department assess your actual liability upfront and issue a lower-rate certificate. Filing it correctly and promptly is what separates a smooth property transaction from months of waiting for a refund.
What is Form 128 (aka Form 13)?
Form 128 (Form 13 under IT Act 1961) is the application to apply for Lower or Nil deduction / collection of TDS / TCS. It must be filed on the TRACES portal. Once submitted, it is forwarded to the Jurisdictional Assessing Officer for review and approval. The certificate, if issued, specifies the lower or nil rate at which the deductor / collector must deduct or collect tax.
I am an NRI selling property in India to a resident buyer. Do I need to apply Form 128?
Yes — highly recommended. When an NRI sells property, the buyer typically deducts TDS on the full sale value at 20–30%, rather than on the capital gain alone. This results in over-deduction. By filing Form 128, the AO can assess your actual capital gain tax liability and issue a lower-rate certificate, significantly reducing the TDS deducted by the buyer and improving your cash flow during the transaction.
Can I apply for Nil deduction of TDS in Form 128?
Yes. If your total income for the year is below the basic exemption limit or you have no taxable income after deductions, you can apply for a Nil deduction certificate in Form 128. The AO will assess your income and, if satisfied, issue a nil-rate certificate for that financial year.
How long does it take to get the Form 128 certificate?
Filing by our team takes 2–5 working days. After submission, the Assessing Officer typically takes 15 to 60 days to review and approve. If the AO requires additional documentation, they will raise a clarification query and the timeline extends until you respond. Plan ahead — especially for property transactions where registration timelines are tight.
What happens if Form 128 is not approved by the Assessing Officer?
If the AO does not approve Form 128, TDS will be deducted at the applicable full rates under the Income Tax Act (20% for long-term capital gains on property for NRIs, or higher for short-term gains). You can then claim a refund of the excess TDS by filing your Income Tax Return for that year. The refund process typically takes 3–12 months from the date of filing.
Does the Form 128 certificate have a validity period?
Yes. A Form 128 certificate is generally valid from the date of issuance to the end of the financial year, unless it is cancelled by the AO before that. If your transaction is expected to span multiple financial years, a fresh Form 128 application may be required for each year.
What is the Circle Rate of a property, and why does it matter for Form 128?
Circle rates (also called guidance values or ready reckoner rates) are the minimum per-unit-area prices for property transactions set by state / local government revenue authorities. The AO uses the circle rate to assess the deemed sale consideration for capital gains computation. If the actual sale price is below the circle rate, the circle rate is taken as the sale price under Section 50C. Refer to Circle Rates by State for state-specific rates and details.