Selling property in India as an NRI involves multiple layers of tax — from TDS deducted at source to capital gains computation. Getting any of these wrong can result in a notice, a penalty, or a blocked remittance.
TDS on NRI Property Sale
When an NRI sells property in India, the buyer must deduct TDS at 20% (Long-Term) or 30% (Short-Term) on the full sale consideration — not just the gain. This is a common point of confusion. You may apply for a lower TDS certificate under Section 197 from your CA before the sale to reduce this burden. The Income Tax portal is where the lower deduction certificate application (Form 13) is filed online.
Capital Gains Tax
- Short-Term (held < 2 years): Taxed at applicable slab rates
- Long-Term (held ≥ 2 years): 20% with indexation benefit
- Indexation adjusts the purchase price for inflation, significantly reducing the taxable gain
- For inherited property, the original owner's cost and holding period are used — often making the gain very long-term
Exemptions Available (Section 54 / 54EC)
- Section 54: Reinvest in another residential property in India within 2 years
- Section 54EC: Invest up to ₹50L in specified bonds (NHAI/REC) within 6 months
- Section 54F: Invest entire sale proceeds in a new house (for non-residential assets)
See our detailed guide on Section 54 and 54EC capital gains exemptions to understand eligibility conditions and timelines.
DTAA Relief on Property Gains
If you are a tax resident of Australia, UK, USA, or another treaty country, you may be entitled to DTAA relief that reduces or eliminates double taxation on the capital gain. This must be claimed correctly in both countries.
Fund Repatriation
Once tax is paid, you can repatriate up to USD 1 million per year from the NRO account under the RBI's Liberalised Remittance Scheme. This requires Form 15CA and 15CB (CA-certified) submitted to the bank before the transfer is processed.