Section 195 TDS on Share Purchase from Non-Resident: The 2026 Guide

Buying shares from a Non-Resident Indian (NRI) involves specific tax responsibilities. Under Section 195, the buyer must deduct TDS before payment to avoid penalties and legal friction under the 2026 tax framework.

1. The 2026 Tax Rates: LTCG vs. STCG

Asset Type Holding Period TDS Rate (Base)
Listed Equity Shares > 12 Months (LTCG) 12.5% (on gains > ₹1.25 Lakh)
Listed Equity Shares < 12 Months (STCG) 20%
Unlisted Shares > 24 Months (LTCG) 12.5%
Unlisted Shares < 24 Months (STCG) Slab Rates (up to 30%)
Compliance Alert TDS must be calculated on actual capital gains including Surcharge and 4% Health & Education Cess, unless a Section 197 certificate is provided.

2. The Buyer's Compliance Checklist

Step 1: TAN Requirement

A Tax Account Number (TAN) is mandatory for depositing TDS on share purchases from NRIs. Personal PAN cannot be used for these filings.

Step 2: Valuation and Forms

Ensure you obtain the seller's purchase invoice to calculate gains correctly. Form 15CA and a CA-certified Form 15CB are required before any foreign remittance.

3. Common Pitfalls

  • No Threshold: Section 195 applies to all transaction values; there is no ₹50 Lakh minimum.
  • Surcharge Errors: Forgetting to add the 10-15% surcharge results in tax notices.