So, is Form 13 dead?
No. It has simply been renumbered as part of the wider overhaul that replaced the Income-tax Act, 1961 with the Income-tax Act, 2025. The application form and the section it sits under were given new numbers, but the certificate does exactly the same job it always did — it lets you have TDS deducted on your actual gain instead of the full sale value. If you already understood Form 13, you already understand Form 128; only the labels have moved.
- Application: Form 13
- Provision: Section 197
- Purpose: Lower / Nil TDS Certificate
- Application: Form 128
- Provision: Section 395
- Purpose: same Lower / Nil TDS Certificate
What Form 128 (formerly Form 13) actually does
When an NRI sells property in India, the buyer is required to deduct TDS at source under Section 393(2) (formerly Section 195) — and by default that deduction is on the entire sale price, at the higher NRI rate. Form 128 is your application to the Assessing Officer for a certificate that lowers (or nils) that deduction, so tax is withheld on your real capital gain rather than the gross value. Filed and approved before the sale deed is registered, it can free up lakhs of rupees at the exact moment you sell.
- Buyer deducts TDS on the FULL sale price
- Higher NRI rate — up to ~30% on short-term gains
- Lakhs locked until you file your ITR and claim a refund
- TDS deducted on your actual gain only
- Rate matched to your real liability
- Cash freed at the moment of sale
A worked example: the cash you actually free up
Numbers make the point faster than theory. Imagine an NRI selling a Gurugram flat for Rs 2 crore, on which the actual long-term gain works out to roughly Rs 40 lakh. Without a certificate, the buyer must deduct TDS on the full Rs 2 crore sale price at the higher NRI rate — up to ~30% on short-term gains — even though the real taxable gain is a fraction of that. With Form 128 (formerly Form 13) in hand, the deduction is recalculated on the Rs 40 lakh gain instead. The tax you ultimately owe is the same; what changes is how much is locked away between the sale and your refund.
| Scenario | Base TDS is deducted on | Effect on your cash |
|---|---|---|
| Without Form 128 (default) | The full sale price — say Rs 2,00,00,000 | A large sum withheld up front, locked until you file your ITR |
| With Form 128 | Only your actual gain — say Rs 40,00,000 | Far less withheld; the balance stays in your hands at sale |
The gap between those two rows is money that would otherwise sit with the tax department for months. For most NRIs it runs into several lakhs — enough to matter when you are trying to repatriate funds, reinvest, or close on a purchase abroad.
What changed — and what didn't
The change is almost entirely cosmetic. Here is the honest split:
- Changed — the form number (Form 13 → Form 128).
- Changed — the section number (Section 197 → Section 395).
- Changed — the governing Act (1961 → 2025).
- Unchanged — the purpose: a Lower / Nil TDS Certificate.
- Unchanged — the process: applied for on TRACES and approved by the Assessing Officer.
- Unchanged — the timing: it must be in hand before the sale is registered.
Plenty of guides, bank pages and even sale agreements still say “Form 13” or “Section 197”. Treat them as referring to today's Form 128 / Section 395 — the substance is identical. Count each transaction against the rules in force for that year.
The buyer's side: Section 393(2) (formerly Section 195)
It helps to remember whose obligation this really is. The deduction is the buyer's legal duty under Section 393(2) (formerly Section 195) — not yours. When an NRI sells, the buyer must withhold TDS and deposit it against your PAN, and if they under-deduct, the liability falls on the buyer. That is precisely why buyers default to the safe, higher deduction on the gross sale price: it protects them. Your Form 128 certificate is what gives the buyer written cover to deduct less. Hand it over before the sale deed is registered and the buyer can act on it; produce it afterwards and it is too late for that transaction — you are back to reclaiming the excess through your return.
How to apply for Form 128
The route is the same one Form 13 always followed — only the labels on the form are new.
Start early — begin the application 6–8 weeks before registration. The certificate must be received before the sale deed is registered, or the buyer must deduct at the full default rate.
The documents you'll need
A Form 128 application stands or falls on its supporting paperwork. The Assessing Officer is being asked to accept a lower deduction, so the file has to show the gain is genuine and correctly computed. Pull these together before you file:
- Your PAN and passport, plus proof of NRI status for the relevant year.
- The original purchase deed, showing the acquisition cost and date.
- The draft sale agreement (agreement to sell) with the sale price and buyer details.
- A capital-gains computation — indexed cost, cost of improvements, and the resulting gain.
- Proof of any reinvestment you intend to claim under the capital-gains exemption provisions.
- The buyer's PAN and TAN, so the certificate is mapped to the right transaction.
What the Assessing Officer looks at
The certificate is discretionary, not automatic. Before issuing it, the Assessing Officer weighs a handful of things:
- Whether your capital-gains computation is realistic and backed by documents.
- Your past compliance — returns filed, no large outstanding demands.
- Whether the reinvestment or exemption you are claiming is credible.
- That the buyer's TAN and the transaction details are complete and consistent.
Most delays are self-inflicted: an incomplete gain computation, a missing buyer TAN, a mismatch between the draft agreement and the figures filed, or simply starting too late. Every query the officer raises adds days you may not have before registration. A clean, complete file is what moves fastest — and why the 6–8 week head start matters.
Skip it, and you're on the slow refund route
What if you don't bother with Form 128? Nothing illegal happens — the buyer simply deducts TDS on the full sale price at the default NRI rate, and you recover the excess later by filing your income-tax return and claiming a refund. But that route is slow: you wait for the financial year to end, file your ITR, and then wait for the refund to be processed, which can stretch the timeline close to a year. Your money is safe; it is just not in your hands. Form 128 front-loads the fix so the right amount is withheld at source, instead of a large sum being clawed back months after the sale.
- Form 13 isn't dead — it's renamed to Form 128 under the Income-tax Act, 2025.
- The provision moved from Section 197 to Section 395; the buyer's deduction is under Section 393(2) (formerly Section 195).
- The certificate's job is unchanged: TDS on your gain, not the gross sale price.
- Old references to “Form 13 / Section 197” now mean Form 128 / Section 395.
- File 6–8 weeks ahead — it must be approved before the sale deed is registered.
- Skip it and your only remedy is a refund via your ITR — often close to a year away.
Frequently asked questions
Is Form 13 still valid?
The concept is — it has just been renamed to Form 128 under the Income-tax Act, 2025. New applications use Form 128; certificates already issued as “Form 13” remain valid for their stated period.
Is Form 13 the same as Form 128?
Yes. Form 128 is the renamed Form 13 — the application for a Lower / Nil TDS Certificate. The form number and its section (now Section 395, formerly Section 197) changed; the purpose and process did not.
Which section is Form 128 filed under?
Section 395 of the Income-tax Act, 2025 — the successor to Section 197 of the old 1961 Act.
Do I need Form 128 if I'm an NRI selling property?
Almost always, if you want to protect cash flow. Without it, the buyer deducts TDS on the full sale price at the higher NRI rate. With it, tax is withheld on your gain — often freeing up lakhs at the moment of sale.
What documents do I need for Form 128?
At minimum: your PAN and passport, proof of NRI status, the original purchase deed, the draft sale agreement, a capital-gains computation, and the buyer's PAN and TAN. Missing or inconsistent documents are the most common cause of delay.
How long does Form 128 take?
Plan for roughly 6–8 weeks from filing to the certificate being issued, and start before you fix a registration date. The certificate must be received before the sale deed is registered, so filing early is what protects the lower deduction.
I already have a Form 13 certificate — is it still valid?
Yes. A certificate issued as Form 13 stays valid for the period stated on it; you don't need to reapply just because the form was renamed. New applications, though, are filed as Form 128 under Section 395.
This article is for general information only and reflects rules current as of 2026. It is not legal, tax, or financial advice — form and section numbers, rates and procedures can change, so please confirm the current position with a qualified professional before acting.