Why your buyer is holding back a fifth of the sale price
It is calculated on the whole sale price, not your profit. There is a way to fix that, but only before you sell.
You agree a price. Then the buyer's accountant tells them to hold back a fifth of it, sometimes more, and send it to the tax department. It feels absurd. Here is why it happens and what to do about it.
Why the amount feels wrong
Because it is calculated on the entire sale price, not on your profit. Sell for one crore with a real gain of twenty lakh and tax is deducted as though the whole crore were income. The deduction can easily exceed your total actual liability, sometimes by several times.
The buyer is not being difficult. When the seller is not resident in India, the buyer is legally required to deduct, and the buyer is personally liable if they get it wrong. So they deduct the maximum, and their accountant advises exactly that.
Two ways out, and only one of them is good
Refund afterwards. File a return, show the real gain, claim the excess back. It works, but it takes months and meanwhile your money sits with the department.
Lower deduction certificate, applied for in advance. Much better. You apply before the sale, demonstrate what the actual gain will be, and the department issues a certificate directing the buyer to deduct less.
Why the valuation is the heart of it
To show the real gain you have to show the real cost. For property bought before April 2001, that means an evidenced 1 April 2001 value from a registered valuer. Without it, you have no way to demonstrate a lower gain and the application has nothing to stand on.
The order to do things in
- Valuation first, before the sale agreement if you can manage it.
- Your accountant computes the expected gain.
- File the application with the valuation as supporting evidence.
- Certificate issued, buyer deducts less, your money stays with you.
Start early. Really.
The most common call we get from abroad is after completion, asking whether the deduction can be reversed. It cannot. At that point it becomes a refund claim. Begin when you decide to sell, not when you have sold.
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Checked by a government approved valuer. Last reviewed 28 Jul 2026.
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