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NRI · FEMANRI sale of Indian property: capital gains, TDS and repatriation
When an NRI sells a flat in India, the buyer must deduct TDS on the capital gain at non-resident rates – often a large amount. Indexation is not available to non-residents after July 2024. Here is how tax, TDS, exemptions and repatriation work.
NRIs often own flats or plots in India – bought before moving abroad or inherited. Selling them involves capital gains tax, higher TDS by the buyer, and FEMA rules on repatriation.
Tax rates (transfers from 23 July 2024)
| Holding | Type | Rate for non-residents |
|---|---|---|
| ≤ 24 months | STCG | Slab rates (TDS at 30%) |
| > 24 months | LTCG | 12.5% without indexation |
Surcharge (10%/15% above ₹50 lakh/₹1 crore of income; capped at 15% on such gains) and 4% cess apply. The indexation option is not available to non-residents.
TDS by the buyer
- Buyer must have TAN (Budget 2026 proposed PAN-based deposit for resident individual/HUF buyers from 1 October 2026, as reported).
- TDS on the capital gain (the taxable portion), not necessarily the whole price – but if the buyer cannot verify the gain, banks and buyers often deduct on the full consideration unless a certificate is produced.
- Deposit and file Form 27Q (or the corresponding new-Act statement); issue Form 16A (or new form) to the seller.
Lower deduction certificate
The NRI can apply for a certificate under Section 197 (Section 395) for lower/nil TDS based on the actual gain and planned exemptions. This is often essential to avoid TDS on the gross price. See lower or nil TDS certificate.
Worked example
Example: Mr Arora, an NRI in Canada, sells a flat in Pitampura in December 2025 for ₹1,50,00,000. He bought it in 2012 for ₹45,00,000 (with stamp duty). Stamp duty value is ₹1,45,00,000.
| Item | Amount |
|---|---|
| Sale consideration | ₹1,50,00,000 |
| Cost (no indexation for NR) | ₹45,00,000 |
| LTCG | ₹1,05,00,000 |
| Tax @ 12.5% | ₹13,12,500 |
| Surcharge 15% (income > ₹1 crore) | ₹1,96,875 |
| Cess 4% | ₹60,375 |
| Total tax / TDS | ₹15,69,750 |
If he invests ₹50 lakh in 54EC bonds within 6 months and buys a house in India under Section 54 for ₹55 lakh, LTCG becomes nil, and he can seek a nil/lower TDS certificate before the sale. Without the certificate, the buyer deducts ₹15.7 lakh (or more on gross value), which he can only recover by filing ITR-2 and waiting for the refund.
A resident seller in the same situation could choose 20% with indexation (cost indexed 376/200 ≈ ₹84.6 lakh, gain ≈ ₹65.4 lakh, tax ≈ ₹13.1 lakh before surcharge) – an option the NRI does not have.
Repatriation
- Sale proceeds are credited to the NRO account.
- Repatriate up to USD 1 million per FY (all NRO balances combined) with Form 15CA/15CB.
- If the property was bought with foreign exchange (NRE/FCNR funds or inward remittance), repatriation of the amount paid is permitted for up to two residential properties, outside the USD 1 million limit in some cases – keep purchase records.
- Inherited property proceeds: within USD 1 million, with documents (will, succession certificate).
Documents checklist
- Sale deed, purchase deed, payment proofs
- PAN, passport, OCI/PIO card, overseas address proof
- Form 13 application and certificate (if obtained)
- Form 16A/TDS certificate from buyer
- 15CA/15CB for remittance
- Bank's FIRC/remittance advice
Common mistakes
- Selling without a lower TDS certificate and losing cash flow for 1–2 years.
- Assuming indexation is available.
- Buyer deducting only 1% – the buyer becomes liable for short deduction.
- Not reinvesting within 54/54EC deadlines.
Key takeaway
For NRIs, plan property sales in advance: compute the gain at 12.5% without indexation, plan 54/54EC exemptions, obtain a lower TDS certificate and arrange repatriation through NRO with 15CA/15CB. Our NRI services team manages the full process for NRI sellers from Delhi NCR.
Official references
Official sources to verify the current text, notifications and circulars:
Frequently asked questions
What TDS applies when an NRI sells property?
The buyer deducts TDS under Section 195 (Section 393(2) of the 2025 Act) on the capital gain – 12.5% plus surcharge and cess for long-term gains, and 30% plus surcharge and cess for short-term gains – not the 1% that applies to resident sellers.
Can an NRI use the 20% with indexation option?
No. The option to pay 20% with indexation on land or buildings acquired before 23 July 2024 is available only to resident individuals and HUFs. Non-residents pay 12.5% without indexation on long-term gains.
Can an NRI claim Section 54 exemption?
Yes. NRIs can claim Section 54 (reinvestment in a residential house in India) and Section 54EC (specified bonds) on long-term gains, subject to conditions.
How much of the sale proceeds can be repatriated?
Up to USD 1 million per financial year from the NRO account, after taxes, with Form 15CA/15CB. Proceeds of property bought with foreign exchange may be repatriated subject to limits on number of properties.
Can an NRI buy agricultural land in India?
No. NRIs and OCIs cannot acquire agricultural land, plantation property or farmhouses, except by inheritance.
Is TDS deducted on the full sale value if no certificate is obtained?
Legally TDS is on the income (gain), but where the buyer cannot verify the cost, deduction on a higher base is common in practice; a lower deduction certificate avoids this.
Can sale proceeds be credited directly to an NRE account?
Generally, sale proceeds go to the NRO account; repatriation is then made within limits.
This article is general information on the law as on 10 November 2026, written for educational purposes. It is not professional advice for your case. Section numbers under the Income-tax Act, 2025 should be confirmed with the official section mapping on the Income Tax Department website before use in filings.
Have a tax, GST or business question?
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