Form 13 for NRI

Table of Content

1. What Is Form 128 for NRI?

2. Why Do NRIs Need Form 128?

3. Applicability of Form 128 for NRIs

4. What is the Eligibility Criteria for Filing Form 128?

5. What are the Documents Required for Form 128 Application?

6. Step-by-Step Process to Apply for Form 128

7. What are the Benefits of Applying for Form 128?

8. 6 Common Mistakes NRIs Should Avoid While Filing Form 128

9. 7 Important Things NRIs Should Know Before Applying for Form 128

10. Conclusion

11. FAQ's on Form 128 for NRI

Life insurance can help NRIs create a financial safety net for their families while managing their long-term financial commitments in India and abroad. Similarly, understanding tax requirements can help protect the value of their financial transactions.

Form 128 for NRI is a formal application that they submit to the Income Tax Department to request a lower Tax Deducted at Source (TDS) Certificate^#. This certificate can help NRIs avoid massive deductions and improve their financial planning. A lower TDS Certificate can be useful when selling property in India, as it can reduce the TDS deducted from the sale value.

This guide explains the application process, eligibility, taxation rules, and required documentation.

What Is Form 128 for NRI?

Form 128 for NRI is an application used to seek a certificate for lower deduction of Tax Deducted at Source (TDS), filed under Section 395(1) of the Income-tax Act, 2025 (corresponding to Section 197(1) of the Income-tax Act, 1961). NRIs do this when the deduction of tax is at a higher rate than their actual tax liability^#.

The Income Tax Department examines the taxpayer’s income, estimated tax liability and relevant supporting information before deciding whether to issue the certificate. For an NRI earning taxable income in India, TDS can apply to payments such as interest, rent, professional income or certain property-related transactions^#.

If the applicable deduction does not match the final tax liability, the taxpayer may have to wait for a refund after filing the income tax return. A lower TDS certificate can help reduce this upfront deduction when the taxpayer meets the prescribed conditions and the tax authority approves the request^#.

For example, an NRI earns ₹10 lakh in interest income in India. from his retirement & pension plans. The payer may deduct TDS at 30%. By submitting Form 128, the NRI can request a lower TDS rate. If approved at 10%, only ₹1 lakh gets deducted instead of ₹3 lakh, improving cash flow.  (Note: interest on NRE accounts maintained in accordance with FEMA is separately exempt under Schedule IV of the 2025 Act / Section 10(4)(ii) of the 1961 Act, and is not subject to this analysis.)

So, to put it simply, the certificate does not remove the underlying tax liability. Instead, it allows the tax deducted at source to better reflect the taxpayer’s expected liability^#.

Note: For Tax Year 2026–27, the Income Tax Department has introduced Form 128 under Section 395(1) of the Income Tax Act, 2025 for applications for lower or nil deduction. Therefore, “Form 13” remains a commonly used term for the earlier process, while applicants should check the applicable form for the relevant tax year^#.

Why Do NRIs Need Form 128?

NRIs can face TDS deductions on certain India-sourced income. Moreover, the applicable rate can sometimes result in a higher upfront deduction than their eventual tax liability^#. This can create a cash-flow burden, particularly for high-value transactions such as property sales.

A lower TDS certificate for NRI can help an eligible taxpayer reduce the amount withheld at the source instead of paying excess tax upfront and subsequently seeking a refund. It can therefore support better cash-flow management during the relevant tax year^#.

Below are 3 primary reasons why a Form 128 for NRI is necessary:

1. Avoid Excess TDS Deduction

TDS can, in some cases, exceed the actual tax payable when the taxpayer’s final taxable income, deductions or applicable tax treatment results in a lower liability^#.

An approved lower or nil deduction certificate can help align the amount withheld with the expected liability. This can support retirement planning by reducing the amount of excess tax blocked until the taxpayer completes the return-filing and refund process^#.

2. Improve Cash Flow During Transactions

A lower TDS rate can reduce the amount deducted from a payment before the NRI receives it. This can be particularly useful during large transactions, where a substantial upfront deduction could affect available funds.

For example, reducing unnecessary withholding on an eligible transaction can leave more funds available for other financial commitments.

3. Reduce Tax Refund Delays

NRIs may face higher TDS on certain Indian incomes than their actual tax liability. Applying for a lower deduction certificate can reduce the amount deducted upfront, which may reduce the amount that needs to be recovered through a later tax refund^#.

This reduces the tax deducted upfront^#. Also, it can improve cash flow for NRIs receiving income linked to investments or a PRAN.

Applicability of Form 128 for NRIs

The relevance of Form 128 for NRI depends on the type of income and applicable TDS provisions. NRIs may use it for property sales, rental income, interest on deposits and certain investments where the expected tax liability is lower than the applicable TDS^#.

For instance, rental income may qualify for deductions that reduce taxable income, while interest income may have different tax treatment. Therefore, NRIs should assess their estimated taxable income, tax liability and supporting documents before applying^#.

Below are the 3 situations in which Form 128 can be used by an NRI:

1. Property Sale Transactions

Property sales by NRIs can involve significant TDS because the buyer may have to deduct tax from the payment. However, the NRI’s eventual capital gains liability depends on factors such as the nature of the property, acquisition cost and other applicable tax provisions.

This is why, where the expected tax liability is lower, an approved lower TDS certificate can provide NRI property sale TDS relief by reducing the amount withheld upfront.

2. Rental Income Earned in India

An NRI earning rent from property in India may face TDS on rental payments. The final tax liability can differ from the amount initially withheld after considering the applicable deductions and taxable-income calculation^#.

This is why, anywhere the circumstances justify it, the taxpayer can seek a lower deduction certificate so that the withholding better reflects the expected liability^#.

3. Interest and Investment Income

NRIs may earn interest from fixed deposits and other investments in India, with TDS applying according to the relevant provisions. If the taxpayer expects the final tax liability to be lower than the amount deducted, they can consider requesting a lower deduction^#.

Their application should contain accurate income and tax estimates so the tax authority can assess the request appropriately^#.

What is the Eligibility Criteria for Filing Form 128?

A person can consider filing Form 128 income tax for NRI application when the income received or expected to be received in India attracts TDS. However, the taxpayer expects the applicable deduction to exceed the actual tax payable^#.

Below are 8 eligibility criteria under which an NRI is allowed to file Form 128:

1. Avoid Tax Accumulation: If standard TDS rates apply to your gross receipts, it can lead to excess tax accumulation with the government. So, to avoid it, you can apply for Form 128^#.

2. High Standard TDS: If your profit margins are thin, standard TDS may easily exceed your actual net tax due, so you can apply for Form 128 for NRI.

3. PAN Registration: The taxpayer should have a valid and active PAN for the online tax-compliance process^#.

4. Accurate Tax Information: The income, TDS and estimated tax-liability details provided in the application should be supported by appropriate records^#.

5. Loss-Making Businesses: If the taxpayer is operating a business currently incurring financial losses or holds substantial carried-forward business losses from last years, they can apply^#.

6. Low Profit Margins: Applying is possible for high-volume, low-margin businesses where the standard TDS percentage is higher than the actual net profit margin.

7. Exemptions and Deductions: NRIs can also apply if they qualify for specialised tax holidays, profit deductions, or possess a total estimated income that sits below the basic exemption slab^#.

8. Non-Resident Property Sales: NRIs can apply if they are selling immovable property where standard TDS is levied on the total sale consideration, but the actual capital gains tax liability is significantly lower^#.

What are the Documents Required for Form 128 Application?

An NRI should keep relevant documents ready before submitting an income tax Form 128 application^#. Per the notified FAQ, the documents mandatorily required are:

1. Computation of estimated total income and tax liability for the Tax Year^#.

2. Computation of income for any preceding Tax Year(s) - required only if an ITR was not filed for that year (up to the last four Tax Years) ^#.

3. A note on income claimed as exempt and not included in total income, if applicable.

These documents help establish the taxpayer’s identity, income, expected tax liability and reason for requesting lower or nil TDS^#.

1. In addition, the following supporting records are generally useful (and were relevant under the erstwhile Form 13/Rule 28AA process, where several were auto-fetched by CPC-TDS rather than uploaded by the applicant):PAN Card: A self-attested copy of your Permanent Account Number card.

2. Income Tax Returns (ITR): Copies of ITRs with acknowledgements and income computations for the last 3 to 4 financial years^#.

3. Assessment Orders: Copies of final assessment orders or intimations for the last 3 to 4 assessment years, if applicable.

4. Financial Statements: Audited financial statements, balance sheets, profit and loss accounts, and audit reports for the past 3 years (if you have professional income).

5. Computation of Estimated Income: Self-attested worksheets showing your projected income, tax calculations, and estimated income computation for the current financial year^#.

6. E-TDS Returns: Acknowledged copies of E-TDS/TCS returns filed for the past 2 financial years.

7. Tax Details and Form 168 (corresponding to Form 26AS): Details of existing tax liabilities, Form 168, or the Annual Information Statement (AIS) showing tax deducted so far^#.

8. TAN of Payers: Tax Deduction and Collection Account Number (TAN) details of all parties or deductors responsible for making payments to you^#.

9. Income-Specific Proofs: Additional supporting documents on the basis of your case, such as a draft sale agreement and passport copies (if you are an NRI selling property) or specific exemption certificates.

Step-by-Step Process to Apply for Form 128

A person seeking a lower TDS certificate for NRI needs to submit the prescribed application with accurate income and tax details. For Tax Year 2026–27, the Income Tax Department states that Form 128 is the prescribed application for a lower or nil withholding certificate under Section 395(1)^#. The application process is available through TRACES or the e-filing portal, and cannot be filed offline.

Below are the steps that you can follow to apply for a lower TDS certificate:

1. Login to the Income Tax Portal

Access the Income Tax Department’s e-filing portal using the credentials linked to your PAN. The PAN helps connect your tax records with the application and other compliance information^#.

For the Form 128 process under the earlier framework, registered taxpayers could also submit the request through TRACES under the “Statements/Forms” tab. For the current process, applicants should use the portal and form applicable to the relevant tax year^#.

2. Fill Form 128 Details Online

Enter details about your expected income, taxable income, TDS and estimated tax liability in the prescribed application while online Form 128 filing. Use numbers supported by your records and tax computation^#.

Never make assumptions or give rough estimates. This is because accurate information helps the assessing authority evaluate the amount of tax that should reasonably be deducted from the relevant income^#.

3. Upload Supporting Documents

Then, submit documents that support the figures in your application. These can include income records, TDS information, transaction documents and the computation used to determine your estimated tax liability.

For a property transaction, keep relevant purchase and sale records and details used to calculate the taxable gain^#. Furthermore, make sure that the documents support the information entered in the application.

4. Verification and Certificate Issuance

After submission, the relevant income-tax authority will review your application and supporting information^#. If the authority accepts the request, it will issue the reduce TDS for NRIs certificate specifying the applicable terms.

The certificate can specify a lower or nil deduction where the assessing authority is satisfied that the taxpayer’s estimated income and tax liability justify it. The payer can then use the certificate when deducting tax from the covered payment^#.

Please note that the certificate does not remove the taxpayer’s responsibility to report the income and meet applicable tax-compliance requirements^#.

How Does Form 128 Help During NRI Property Sales?

Let us understand the role of Form 128 during NRI property sales with Arun’s example. Arun is an NRI who has a house in Bangalore, India; he wants to sell it to Gita; however, he is worried about the heavy TDS deductions on his sale that will impact his earnings from the sale.

This is why he is considering filing an application for Form 128. Now, without the certificate, Gita must deduct TDS on the entire sale consideration and not just the profit. The rates are very high. For example, if the sale falls under the capital gains provisions applicable to transfers made on or after 23 July 2024, long-term capital gains can attract around 12.5% (without indexation) plus surcharge and cess, while short-term capital gains (STCG) can attract up to 30% plus surcharge and cess, subject to any relief available under an applicable DTAA.

These figures are illustrative of the underlying applicable tax treatment and should not be confused with the lower-deduction certificate rate^#. The TDS amount depends on the relevant provisions. If TDS on the gross sale consideration exceeds Arun’s actual tax liability, the excess amount may remain blocked until he files his income tax return and claims a refund^#.

A Form 128 TDS NRI application can help in such cases. If approved, the buyer can deduct TDS at the rate specified in the certificate. This can improve Arun’s upfront liquidity, while the certificate only reduces TDS and does not eliminate his final tax liability^#.

What are the Benefits of Applying for Form 128?

Obtaining a lower deduction certificate can help an NRI align TDS more closely with the estimated tax liability on covered income. Instead of having a larger amount deducted upfront and seeking a refund later, the taxpayer may retain more of the funds during the relevant period^#.

This can improve liquidity and make it easier to plan a property sale or another taxable transaction. The benefit depends on the tax authority approving the application and specifying the applicable lower or nil deduction^#.

Below are 3 primary benefits of applying for Form 128 for NRI:

1. Lower Upfront Tax Deduction

A lower deduction certificate can reduce the amount withheld from an eligible payment when the assessing authority determines that the normal deduction would exceed the estimated tax liability^#.

This can help the taxpayer retain more funds upfront while keeping the withholding closer to the expected tax position^#.

2. Better Financial Planning

Knowing the approved deduction rate can give an NRI a clearer estimate of the amount likely to remain after TDS. This can make transaction planning easier, particularly when the taxpayer needs to allocate sale proceeds towards another financial commitment^#.

A clear estimate can also help the NRI in their retirement planning strategy that deals with other financial products and can benefit from the savings of TDS.

3. Reduced Dependence on Tax Refunds

A lower deduction can reduce the difference between TDS withheld during the year and the taxpayer’s eventual liability^#.

Thus, as a result, an NRI may have less excess tax to recover through a later refund^#. This can make cash-flow management more convenient.

6 Common Mistakes NRIs Should Avoid While Filing Form 128

A carefully prepared application can make it easier for the assessing authority to evaluate the requested lower deduction. So, if you are thinking what are the mistakes to avoid while filing Form 128, NRIs should therefore check the following points before submitting the application:

1. Incorrect Income Estimation: Underestimating or overstating expected income can affect the authority’s assessment of the appropriate TDS rate. So, always use realistic figures on the basis of available records.

2. Missing Documents: Incomplete supporting documents can delay the review. So, keep income records, TDS details, transaction documents and tax computations ready before applying^#.

3. Inaccurate Capital-Gains Calculation: Property-sale applications require careful calculation of taxable capital gains^#. Thus, check acquisition costs and eligible expenses before entering figures.

4. Delayed Application: Apply sufficiently before the relevant payment becomes subject to TDS. This is because waiting until the transaction is close to completion can limit practical scope for obtaining the certificate.

5. Inconsistent Information: Make sure that the figures in the application match your supporting documents and other tax records.

6. Ignoring Verification: Always remember to complete the prescribed verification process after submitting the application. An incomplete submission may prevent timely processing.

7 Important Things NRIs Should Know Before Applying for Form 128

An NRI should review the tax position and transaction details before submitting an application for lower or nil deduction. Below are a few points that you will need to keep in mind before applying for Form 128 for NRI^#:

1. Apply at the Right Time: Start the process before the payer makes the relevant payment or deducts TDS. This gives the application adequate time for processing.

2. Calculate Tax Carefully: You should also estimate the taxable income and expected liability using current provisions rather than relying on the gross amount received^#.

3. Keep PAN Details Ready: You need to have a valid PAN, which is correctly linked to tax records, as it remains important for online tax compliance and authentication^#.

4. Prepare Documentation: Keep income proofs, transaction records, TDS information and supporting tax computations available before beginning the application^#.

5. Check the Applicable Form: For Tax Year 2026–27, the Income Tax Department has prescribed Form 128 under Section 395(1) for lower or nil deduction applications. Applicants should check the current form and applicable provisions rather than relying only on the earlier Form 13^#.

6. Review the Certificate: If approved, check the certificate’s rate, validity and conditions before sharing it with the payer.

7. Maintain Records: Finally, you should also keep the application, supporting documents and certificate safely for future tax-compliance requirements^#.

Please note: NRIs planning long-term finances may also encounter types of pension plans while researching retirement products. This subject remains separate from TDS certificate applications and should not affect the tax computation submitted for Form 128^#.

Conclusion

Form 13 for NRI remains relevant for income pertaining to FY 2025-26 and earlier years under the Income-tax Act, 1961. However, applications made under the Income Tax Act, 2025 now use Form 128 under Section 395 for a lower or nil deduction certificate. NRIs should therefore rely on the current form, provide accurate income and tax details, and submit relevant supporting documents^#.

The tax authority reviews the application before deciding whether to issue the certificate and specifying the applicable deduction terms. For property transactions, applying at the appropriate stage can help an NRI manage the amount withheld from the sale proceeds. This is the exact reason why it also helps an NRI save a lot.

Moreover, it is also important to keep in mind that managing TDS is one part of financial planning. Life insurance can help NRIs protect their families financially against unexpected situations and manage commitments such as education expenses, home loans and household needs^#.

FAQ's on Form 128 for NRI

1. Is Form 128 mandatory for all NRIs in India?

No, Form 128 is not mandatory for all NRIs in India. It is a voluntary application that an NRI can opt for if they want a lower or nil deduction of Tax Deducted at Source (TDS) ^#.

2. Can NRIs apply for Form 128 online?

Yes, NRIs can apply for Form 128 online through the TRACES Form 128 process. To submit an application, they can go to the website and use the option ‘Request for Form 13/15C/15D’ which is available under the ‘Statements/Forms’ tab.

3. How long does it take to get a lower TDS certificate?

There is no statutorily prescribed timeline; processing time varies based on the completeness of the application and any clarifications sought by the Assessing Officer. It usually takes 15 to 30 days to get a lower TDS certificate. A delay can happen if the Assessing Officer (AO) asks for extra documents, you have pending tax dues, or there are mismatched income proofs^#.

4. Is PAN mandatory for filing Form 128?

Yes, PAN is mandatory for filing Form 128. This is because the tax department will need it to track your specific tax history, past returns, and estimated income and identify your profile. Remember that your PAN should also be linked to your Aadhaar to successfully complete tax verification and submissions on the portal^#.

5. Can Form 128 be used for rental income?

Yes, Form 128 for NRI can be used for rental income. This can help NRIs who are facing high TDS rates on gross rent. It can help them align their tax deduction with their actual estimated tax liability. Once you get the approval certificate, you can give it to your tenant so they deduct tax at the new and lower rate than before^#.

6. What happens if Form 128 is not filed during property sale?

If Form 128 for NRI is not filed during a property sale, then the buyer is legally required to deduct TDS at the standard, higher rate on the entire gross sale value rather than on the actual capital gains. This can result in a massive chunk of your sale proceeds getting locked up with the Income Tax Department^#.

7. Can NRIs apply for nil TDS deduction through Form 128?

Yes, Section 395(1)/395(3) of the Income-tax Act, 2025 (corresponding to Section 197(1)/206C(9) of the Income-tax Act, 1961) expressly empowers the Assessing Officer to issue a certificate for deduction/collection of tax at nil rate where the estimated total income of the applicant justifies it - for instance, where income is below the taxable threshold or covered by an exemption/DTAA benefit^#.

8. Is Form 128 applicable for fixed deposit interest income?

Yes, Form 128 is applicable for fixed deposit interest income. If you get approved, then you have to submit the official certificate to your bank so they deduct TDS at the reduced rate^#.

9. Can buyers deduct lower TDS based on Form 128 approval?

Yes, buyers can deduct lower TDS on the basis of Form 128 approval if they receive an approved lower deduction certificate^#. However, before applying the lower rate, buyers should verify the unique certificate number on the TRACES portal.