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APPLICATION UNDER SECTION 395(1) OF THE INCOME-TAX ACT, 2025 FOR A CERTIFICATE OF LOWER OR NIL DEDUCTION OF TAX ON THE TRANSFER OF IMMOVABLE PROPERTY BY A NON-RESIDENT, TOGETHER WITH A TAX DEDUCTION UNDERTAKING AND INDEMNITY BETWEEN THE SELLER AND THE BUYER

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PART A — STATEMENT OF FACTS, COMPUTATION AND VERIFICATION IN SUPPORT OF FORM No. 128
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Madam or Sir,

1. 1. THE APPLICANT

1.2 My address outside India is __________. I may be reached by electronic mail at __________ and by telephone on __________, and I consent to service of every notice and order in this proceeding at that electronic mail address.

1. 3. THE PROPERTY, THE SELLER'S SHARE IN IT, AND THE PROPOSED TRANSFER

3.2 Where I hold less than the whole, this application, the computation in Schedule II and the certificate sought relate to my share alone. Every other co-owner is a separate assessee, must make a separate application in Form No. 128 under his or her own Permanent Account Number, and the consideration and the gain are apportioned between us according to our respective shares. The names and shares of the other co-owners are stated in Schedule I.

1. 4. WHY A CERTIFICATE IS SOUGHT

4.1 On a purchase from a non-resident seller, the obligation of the person responsible for payment is to withhold tax on the whole sum paid, and not merely on the income embedded in that sum, unless a certificate under section 395(1) directs otherwise. The concessional deduction of one per cent that applies where the seller is resident in India has no application to this transaction, and neither the Buyer nor I intend to proceed on that footing.

5.2 I undertake to inform this office in writing, before the sale deed is executed, of any change in the consideration, in the expected date of completion, or in the identity of the Buyer, and to make a fresh application where the certificate issued no longer fits the transaction.

5.3 I state that, to the best of my knowledge and belief, the said property is not the subject of any attachment, prohibitory order, provisional attachment or outstanding demand under the Income-tax Act, 2025 or under the Income-tax Act, 1961.

5.5 I undertake to produce the originals of every document listed in Schedule III for inspection, and to attend before this office in person or through my authorised representative as and when required.

SCHEDULE I — THE PROPERTY

SCHEDULE II — COMPUTATION OF THE ESTIMATED CAPITAL GAIN ON THE SELLER'S SHARE

A detailed working of the above computation, showing the apportionment of each figure to the Seller's share, showing indexation where claimed, and showing the arithmetic by which the estimated gain has been arrived at, is filed with this statement.

SCHEDULE III — DOCUMENTS ENCLOSED

VERIFICATION

I, __________, the Seller named above, do hereby solemnly declare that what is stated in Part A of this document and in the Schedules to it is true to the best of my knowledge and belief, that the documents enclosed are true copies of their originals, and that nothing material has been concealed. I understand that this statement is furnished in support of an application in Form No. 128 filed electronically under section 395(1) of the Income-tax Act, 2025 read with Rule 213 of the Income-tax Rules, 2026, and that a false statement in it carries consequences under the law.

____________________________
__________
Applicant and Seller
Permanent Account Number __________

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PART B — TAX DEDUCTION UNDERTAKING AND INDEMNITY
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BETWEEN

__________, __________ of __________, __________, holding Permanent Account Number __________ and passport __________, residing at __________, hereinafter called the SELLER, of the ONE PART;

AND

The expressions SELLER and BUYER include, wherever the context admits, their respective heirs, executors, administrators, legal representatives and permitted assigns.

AND WHEREAS the Seller is a non-resident, with the consequence that the Buyer is by law the person responsible for deducting tax at source on the consideration payable to the Seller and is answerable to the Income-tax Department for that deduction irrespective of any arrangement between the parties;

AND WHEREAS the parties consider it necessary to record in writing how the deduction is to be made, when it falls due, when any sum withheld is to be released, and who is to bear the consequence of an error;

NOW THIS UNDERTAKING AND INDEMNITY WITNESSES as follows.

1. 1. THE BUYER'S DEDUCTION OBLIGATION

1.1 The Buyer acknowledges that the Seller is a non-resident, that the concessional one per cent deduction applicable to a purchase from a resident seller does not apply to this transaction, and that the Buyer must therefore obtain a Tax Deduction and Collection Account Number before making any payment of consideration.

1. 2. DEDUCTION WHERE THE CERTIFICATE HAS BEEN ISSUED

2.1 Where, before a payment of consideration falls due, a certificate under section 395(1) has been issued in respect of this transaction and remains in force, the Buyer shall deduct tax at the rate and on the base specified in that certificate and at no higher rate.

2.2 The Buyer shall verify the certificate electronically before acting upon it and shall retain a printed copy of the verification with the transaction file.

1. 3. DEDUCTION WHERE NO CERTIFICATE HAS BEEN ISSUED

3.1 Where a payment of consideration falls due and no certificate under section 395(1) is then in force, the Buyer shall deduct tax at the rate prescribed by law for a payment to a non-resident, computed on the whole of the sum paid and not on the gain embedded in it. For a long-term capital gain on immovable property the base rate is 12.5 per cent with effect from 23 July 2024, plus the applicable surcharge and health and education cess; the surcharge slab turns on the amount of the consideration, and the Buyer shall take advice on the slab applicable to this consideration before making the first payment. The Buyer shall not accept any instruction from the Seller to deduct less.

3.2 The Seller acknowledges that the Buyer's obligation in clause 3.1 is a statutory one, that the Buyer cannot be asked to waive or reduce it on the strength of the Seller's own computation, and that a deduction so made gives the Seller no claim against the Buyer of any kind.

1. 4. DEPOSIT, RETURN AND CERTIFICATE OF DEDUCTION

4.1 The Buyer shall deposit the tax deducted to the credit of the Central Government by the seventh day of the month following the month of deduction, and by the thirtieth day of April where the deduction is made in the month of March.

4.2 The Buyer shall furnish the quarterly statement of deduction in respect of payments to a non-resident in Form 27Q for the quarter in which the deduction falls, within the time prescribed, correctly quoting the Seller's Permanent Account Number __________ and, where a certificate has been acted upon, its number.

4.3 The Buyer shall issue to the Seller the certificate of deduction in Form 16A within the time prescribed after the due date for the relevant Form 27Q, and shall deliver it to the Seller by electronic mail at __________.

4.4 The Buyer shall correct any defect, mismatch or short reporting in a statement filed under clause 4.2 within thirty days of becoming aware of it, so that the credit reaches the Seller's tax credit statement.

1. 5. THE SELLER'S OBLIGATIONS

5.1 The Seller shall file the application in Form No. 128 without delay, shall answer every query of the Assessing Officer within the time allowed, and shall keep the Buyer informed in writing of the progress of the application, including the issue, refusal, modification or cancellation of the certificate, within three working days of the event.

5.2 The Seller shall furnish to the Buyer a copy of the certificate immediately upon its issue, and shall not represent to the Buyer that a certificate has been issued unless it has.

1. 6. WHEN THE DEDUCTION FALLS DUE, AND RETENTION PENDING THE CERTIFICATE

6.1 The parties intend that the sale deed will be executed only after the certificate is in hand. Where, however, the parties agree to complete before the certificate is issued, the Buyer shall deduct in accordance with clause 3.1 at the time of each payment, and the Seller's remedy in respect of the excess so deducted lies in a refund claimed in the return of income and not against the Buyer.

6.2 The parties record that the obligation to deduct arises at the time of payment or credit, whichever is earlier, and not on the day a certificate arrives. No arrangement between them postpones the date on which the deduction or the deposit falls due, and nothing in this clause entitles the Buyer to retain any sum after the deduction and deposit required by law have been made in full.

7.1 The Seller shall indemnify the Buyer and keep the Buyer indemnified against all tax, interest, penalty, fee and reasonable professional costs that the Buyer may be required to bear by reason of any statement made by the Seller in Part A of this document, in Form No. 128, or in support of either of them, being false or incomplete, or by reason of the cancellation, modification or withdrawal of a certificate acted upon by the Buyer in good faith.

7.2 The indemnity in clause 7.1 extends to a demand raised on the Buyer for short deduction where the shortfall arises from a certificate obtained on a misstatement by the Seller, and to interest and fee for late deduction or late deposit caused by the Seller's delay in answering a query or in communicating the outcome of the application. It survives the execution and registration of the sale deed and the delivery of possession.

7.3 The Seller shall reimburse any amount payable under this clause within thirty days of a written demand accompanied by a copy of the order or notice giving rise to it.

1. 8. INDEMNITY BY THE BUYER

8.1 The Buyer shall indemnify the Seller and keep the Seller indemnified against all loss, interest and reasonable professional costs suffered by the Seller by reason of the Buyer failing to deduct at the time the deduction fell due, failing to deposit within time any tax actually deducted, failing to file Form 27Q correctly, failing to issue Form 16A, quoting an incorrect Permanent Account Number, or deducting at a rate higher than that permitted by a certificate then in force.

8.2 Where a credit for tax deducted does not appear in the Seller's tax credit statement because of anything done or omitted by the Buyer, the Buyer shall take every step necessary to have it corrected at the Buyer's own cost.

1. 9. REPATRIATION AND FOREIGN EXCHANGE

9.1 The Buyer acknowledges that the Seller will seek to repatriate the net proceeds through an Authorised Dealer Category-I bank, and shall furnish to the Seller, on request and without charge, copies of the payment advices, the challans evidencing deposit of the deducted tax and the certificate in Form 16A, being the documents that the Authorised Dealer will require.

9.2 The parties record that repatriation runs by one of two different routes and that the ceilings are not the same. Where the property was acquired in foreign exchange remitted through banking channels or out of Non-Resident External or Foreign Currency Non-Resident (Bank) balances, the sale proceeds may be repatriated under paragraph 8.2 of Reserve Bank of India FED Master Direction No. 12/2015-16, and in the case of residential property that route is restricted to not more than two such properties. Where the property was acquired with rupee funds, including funds in a Non-Resident Ordinary account or property inherited or received as a gift in India, repatriation runs instead under the remittance-of-assets route in Reserve Bank of India FED Master Direction No. 13/2015-16, subject to the ceiling of one million United States dollars per financial year, and the two-property restriction has no application to it. All instalments of one sale should be routed through the same Authorised Dealer. The Buyer gives no assurance whatever as to repatriation by either route.

1. 10. NOTICES

1. 11. GOVERNING LAW AND FORUM

11.2 Nothing in clause 11.1 restricts the right of either party to pursue a statutory remedy before the Income-tax authorities, or the right of the Seller as a non-resident to approach any court or forum specially designated for matters concerning non-resident Indians.

1. 12. GENERAL

12.1 This document may be executed in counterparts, and the Seller and the Buyer may sign separate counterparts in different countries; the counterparts together constitute one instrument.

12.2 This document records the whole of the understanding between the parties on the subject of deduction of tax at source on this transaction, and supersedes anything said or written on that subject before it.

SCHEDULE IV — THE BUYER'S COMPLIANCE CHECKLIST

The following steps are the Buyer's and cannot be delegated to the Seller. Tick each as it is done and keep the evidence for at least eight years.

1. 1. Where the property is in the Union Territory of Chandigarh, do this before anything else: ask at the Estate Office, Town Hall Building, Sector 17-C whether the Estate Officer's public notice effective 10 February 2023 still stops transfers and changes of ownership of residential property outside its four permitted categories. A certificate about withholding cannot make a transfer possible that the Estate Officer will not sanction.
2. 2. Confirm in writing, before any payment, that the Seller is a non-resident, and keep the passport pages and the Seller's declaration on the file.
3. 3. Apply for and obtain a Tax Deduction and Collection Account Number. Do this at the agreement stage, not at the registration counter.
4. 4. Obtain and verify the certificate under section 395(1) before making any payment; retain the verification printout.
5. 5. Deduct at the certified rate where a valid certificate exists, and on the gross consideration where it does not. Deduct at the time of payment or credit, whichever is earlier — a sum parked in escrow has not been deducted.
6. 6. Deposit the deducted tax by the seventh of the following month, and by the thirtieth of April for a March deduction, quoting the Tax Deduction and Collection Account Number and not the Permanent Account Number.
7. 7. File Form 27Q for the relevant quarter, quoting __________ and the certificate number, and check the processing status afterwards.
8. 8. Issue Form 16A to the Seller and send it to __________.
9. 9. Deduct separately on each instalment of consideration where the price is paid in parts, including on any advance paid before this document was signed.
10. 10. Where there is more than one non-resident seller, deduct separately on the sum paid to each, against the certificate issued to that seller and no other.
11. 11. Retain the challans, the statements, the certificate and this document together, because a demand for short deduction can arrive years later and the Buyer, not the Seller, is the person it will be addressed to.
12. 12. Where the property is in the Union Territory of Chandigarh, complete the Estate Office formalities and the affidavit pack before registration, since mutation is auto-triggered from the Sub-Registrar and there is no later window in which to correct the papers. Where the property is in Punjab, report the acquisition to the patwari of the halqa for mutation after registration.

EXECUTION

IN WITNESS WHEREOF the parties have signed this document on the date and at the place first written above, having read and understood its contents.

SIGNED by the SELLER

____________________________
__________
__________ of __________
Permanent Account Number __________
Passport __________

SIGNED by the BUYER

IN THE PRESENCE OF THE FOLLOWING WITNESSES

Witness 1

Witness 2

NOTE ON EXECUTION OUTSIDE INDIA

Where the Seller signs outside India, the signature and the attestation by the witnesses should be made before an Indian Consul or Vice-Consul at the Indian Mission, or before a Notary Public of the place of signing with an apostille, as permitted by section 33(1)(c) of the Registration Act, 1908. Find out the stamp denomination for Part B from the Sub-Registrar's counter BEFORE the paper leaves India, and buy the e-stamp certificate in a party's name, because the signed document must be stamped in India within three months of its first receipt here under section 18 of the Indian Stamp Act, 1899, and a document that spends that window in the post while somebody hunts for the figure is a document that cannot be produced in evidence.