Since seller is an NRI sale proceeds must be credited to the NRO account.only 

you have to deduct TDS at 20 per cent and not one per cent 

you should not agree to the terms sought to be imposed by NRI for purchase of property 

If he is selling the property on the basis of his Indian identity card and you have documentary evidences to establish that he's an Indian at the time of selling the property as well as he has provided his Indian savings bank account then you can very well proceed to pay him the sale consideration amount to his Indian savings bank account itself,  you will not be answerable even if for any reasons he is found guilty of any fraudulent activity in future. 

1. NRI has to apply for 'Lower Tax Deduction Certificate' from the jurisdictional Income Tax Officer, as he is the seller and the buyer has to have TAN number. If the NRI seller does not obtain Lower Tax Deduction Certificate' from the Income Tax Officer, the TDS amount would be upto 23.5% of the sale consideration.

2.  TDS has to be as per the recommendation of the jurisdictional  Income Tax Officer.

3.  As a buyer, please be careful as I.T. Officer may knock your door as your seller has furnished wrong information of his status.

4.   This may impact your future selling of the instant property also.

- As per law,  1% TDS rate applies to residents selling property, and if the seller is an NRI and sells property, he cannot ask you to deduct 1% i.e. the lower rate unless he qualifies as a resident for tax purposes.

- Further, he cannot receive the sale proceed in his Indian savings account against the provision of FEMA , and further if he wants to receive the sale proceeds in a resident account, it will create problem for him and not you as you are an Indian resident. 

-  Further , providing ID proof and PAN is not sufficient; his residency status will depend on the number of days he has stayed in India in the relevant financial year.

1) If he is ready to reinvest in real estate or in the bonds then it's ok for to go.

2) He can apply in the income tax department under Form 13 for to get the certificate for Nil or minimum tax deduction at source.

• TDS on Sale of Property by an NRI:

  • Under Section 195 of the Income Tax Act, 1961, when a property is purchased from an NRI, the buyer is obligated to deduct TDS at 20% on long-term capital gains (if the property was held for more than 2 years). The 1% TDS rule under Section 194-IA applies only when both the buyer and seller are residents of India.
  • Even if the seller (NRI) uses a resident savings account for the transaction and provides a PAN card, he is still treated as an NRI for tax purposes. Thus, a lower TDS rate of 1% cannot be applied in this scenario unless special approvals or tax clearance are obtained.

• Remittance and Reinvestment in India:

  • The fact that the seller does not intend to remit the money outside India and plans to reinvest it in India does not change the TDS obligations. The tax treatment remains based on the seller's residential status under the Income Tax Act, not on where the funds are being reinvested.

• Opening of NRE/NRO Account:

  • The NRI seller is required by law to handle such transactions through an NRO account. Using a regular resident savings account for these transactions could raise compliance issues with both the Income Tax Department and RBI. Even though the seller is providing Indian ID and PAN card, it does not override their NRI status for tax purposes.

As a  buyer, you are legally responsible for ensuring the correct TDS is deducted and deposited with the tax authorities. If the correct TDS is not deducted (i.e., 20% for NRI), the tax department can hold the buyer liable for any shortfall, including penalties and interest.

1.No. Since you are a NRI, the I.T.Act demands that you pay 20% towards I.Tax.

2. However, some people suppresses the said c and sell the property showing their Indian address and PAN card and get only 1% deducted towards TDS.