“Synopsis”
Selling property in India as an NRI involves more than just finding a buyer. From TDS on property sale, capital gains tax, and indexation benefits to repatriation of funds abroad, there are several legal and financial procedures you need to follow. This blog breaks down everything NRIs must know to sell property in India in 2025, while staying compliant and maximizing tax efficiency.
Can NRIs Sell Property in India?
Yes. As per FEMA guidelines, NRIs can sell:
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Residential or commercial property freely
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Agricultural land, only if it was inherited (not purchased)
Buyers must be:
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Indian citizens
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Another NRI (in limited cases, subject to FEMA)
TDS on Property Sale for NRIs
The buyer of the property is responsible for deducting Tax Deducted at Source (TDS) when purchasing property from an NRI.
TDS Rates (as per section 195):
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20% on long-term capital gains (LTCG)
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30% on short-term capital gains (STCG)
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Plus surcharge and cess (Effective rate ~23-34%)
Key Point: TDS is calculated on the entire sale value, not just the profit.
Capital Gains Tax for NRIs
1. Short-Term Capital Gains (STCG)
If the property is sold within 2 years of purchase:
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Gains are taxed at 30% + surcharge + cess
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No indexation benefit
2. Long-Term Capital Gains (LTCG)
If the property is held for more than 2 years:
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Gains taxed at 20% with indexation
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Indexation adjusts the purchase price to inflation
Deductions and Exemptions Available
NRIs can claim the same capital gains exemptions as resident Indians:
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Section 54: Reinvest in another residential property in India
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Section 54EC: Invest up to ₹50 lakh in NHAI/REC bonds within 6 months
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Section 54F: If full sale proceeds are invested in a new property (subject to conditions)
Filing Income Tax Returns
Even if TDS is deducted at source, you must file ITR to:
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Claim capital gains exemptions
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Request TDS refund if extra tax was deducted
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Provide details of repatriation and proof of compliance
Repatriating Sale Proceeds Abroad
Under FEMA, NRIs can repatriate sale proceeds of Indian property to their foreign account, but with conditions:
Limits:
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Up to USD 1 million per financial year (including all eligible assets)
Conditions for Repatriation:
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Property was purchased using foreign funds (NRE/FCNR)
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Taxes must be fully paid in India
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Repatriation must be from NRO account
Documents Needed:
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Form 15CA & Form 15CB (from a CA)
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Sale deed and purchase documents
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Tax payment proof
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Bank repatriation request
Best Practices for NRIs Selling Property
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Get the property registered correctly in your name
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Obtain a valuation report to assist with taxation
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Apply for lower TDS certificate to avoid excess deduction
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File ITR with complete capital gain calculation
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Plan repatriation with bank and CA support
Common Mistakes to Avoid
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Assuming resident tax rules apply to NRIs
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Not informing buyer about NRI status (leads to TDS default)
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Using NRE account for sale proceeds
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Skipping ITR filing after TDS deduction
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Not maintaining original documents or indexation proofs
Conclusion
Selling a property in India as an NRI can be smooth and tax-efficient if planned well. From TDS management to capital gains calculation and FEMA-compliant repatriation, every step needs to be handled carefully. Professional guidance is always recommended to avoid tax notices and ensure maximum savings.
