NRI Selling Property in India: Tax, TDS and Repatriation Guide

If you are an NRI selling property in India, you need to plan for more than finding a buyer and signing the sale deed. You must calculate your capital gains tax, understand the buyer’s TDS obligations, prepare the required documents and determine how the proceeds can be transferred abroad.

The most important distinction is that TDS deducted by the buyer is not necessarily your final tax liability. The amount withheld can exceed the tax ultimately payable, particularly when the default withholding calculation does not reflect your actual capital gain or eligible exemptions.

As of October 2026, the Income-tax Act, 2025 and the applicable rules govern current transactions. The Act took effect on 1 April 2026, and the reporting procedure for certain purchases from non-resident sellers changed again on 1 October 2026.

The process generally involves five steps:

1. Calculate the expected capital gain and tax liability.

2. Establish the buyer’s applicable TDS rate and reporting obligations.

3. Consider a lower or nil deduction certificate before payment.

4. Complete the sale and reconcile the tax through the applicable return process.

5. Confirm the FEMA-compliant route for transferring the proceeds abroad.

What should an NRI know before selling property in India?

An NRI can generally sell eligible residential or commercial property in India, subject to applicable property-transfer and foreign-exchange regulations. The tax treatment depends on factors such as your residential status under Indian tax law, the acquisition and transfer dates, the property's ownership history and any eligible deductions or exemptions.

Before finalising the transaction, review these four areas:

These obligations are connected but separate. Paying TDS does not necessarily settle your final tax liability, and completing the property sale does not automatically entitle you to transfer the entire sale consideration abroad.

How is capital gains tax calculated when an NRI sells property in India?

An NRI may be liable for Indian capital gains tax when selling property situated in India. The taxable amount depends on the applicable law, holding period, acquisition history, allowable costs and any qualifying exemption.

A simplified starting point is:

Capital gain = Sale consideration − eligible cost basis − allowable deductions

The final computation may also require adjustments under the applicable valuation rules and other statutory provisions.

Is the gain long-term or short-term?

The holding period determines whether the gain is treated as short-term or long-term.

Under the previous capital gains framework, land and buildings generally qualified as long-term capital assets when held for more than 24 months. For a transaction in 2026–27, verify the corresponding provisions and any relevant transitional rules under the current law before relying on that threshold.

Do not assume that the same tax rate or cost-basis treatment applies to every property sale. The acquisition date, transfer date and circumstances of ownership can materially affect the calculation.

What costs and exemptions can reduce the taxable gain?

Depending on the applicable provisions, the computation may take account of:

• Eligible acquisition costs.

• Qualifying improvement expenses supported by evidence.

• Allowable transfer expenses, such as qualifying brokerage costs.

• Exemptions for eligible reinvestments or specified investments.

• Applicable valuation and transitional adjustments.

Under the previous statutory framework, Sections 54, 54EC and 54F covered different capital gains exemptions. For a current transaction, verify the corresponding provisions under the Income-tax Act, 2025 and the applicable rules before relying on any exemption.

These exemptions are not interchangeable. Eligibility can depend on the type of property sold, the asset or investment acquired, the amount reinvested and the applicable deadlines.

Practical tip: Assess potential exemptions before committing the sale proceeds elsewhere. Reinvesting the money does not automatically eliminate capital gains tax; the specific statutory conditions must be satisfied.

What TDS applies when a buyer purchases property from an NRI?

When a buyer purchases property from a non-resident seller, the buyer generally has a tax-withholding obligation under the applicable Indian income-tax provisions.

The procedure differs from the familiar process for buying property from a resident seller. A buyer should not automatically apply the resident-seller withholding procedure simply because the property is located in India.

The applicable deduction depends on the statutory withholding rules, the nature of the income, the seller's circumstances, the applicable surcharge and cess, and whether a valid lower or nil deduction certificate is available.

Is TDS deducted on the sale price or the capital gain?

The buyer's default withholding calculation and the seller's final capital gains tax calculation are different.

Depending on the applicable provisions, the buyer may have to deduct tax using the prescribed withholding base even when the seller's actual taxable gain is considerably smaller than the sale consideration.

Consider this hypothetical example:

The illustrative gain is ₹25 lakh before other applicable adjustments, not ₹1 crore. However, the buyer cannot automatically calculate TDS by applying an assumed capital gains rate to ₹25 lakh. The buyer must follow the applicable withholding provisions unless a valid certificate or other legally applicable treatment changes the calculation.

This difference can substantially affect the amount the seller receives at closing.

The figures illustrate the distinction between sale consideration and capital gain. They are not a calculation of the actual TDS or final tax liability for a particular transaction.

What changed under the Income-tax Act, 2025?

The Income-tax Act, 2025 took effect on 1 April 2026. The applicable withholding framework for specified payments to non-residents includes Section 393(2).

A further procedural change took effect on 1 October 2026. According to the Income Tax Department, a resident individual or Hindu Undivided Family (HUF) purchasing immovable property from a non-resident can report the relevant deduction through Form 141, Schedule E. For qualifying transactions, obtaining a Tax Deduction and Collection Account Number (TAN) is no longer mandatory for that buyer category under the amended procedure. Income Tax Department: Form 141, Schedule E.

This change does not abolish TDS. The buyer must still determine the applicable deduction, deposit the tax and complete the required reporting.

The procedure differs for buyers such as companies and other entities that do not qualify for the individual/HUF reporting route. Buyers should confirm the current procedure before making payment.

How can an NRI reduce excessive TDS before the property sale?

If the default withholding could substantially exceed your expected tax liability, consider applying for a lower or nil deduction certificate before the buyer makes the relevant payment.

Under Section 395(1) of the Income-tax Act, 2025, a taxpayer may apply for a certificate authorising lower or nil withholding where the prescribed conditions are satisfied.

For tax year 2026–27, the Income Tax Department identifies Form 128 as the application form under the Income-tax Rules, 2026. The Assessing Officer evaluates the application and may issue a certificate specifying the permitted deduction rate and validity period. See the official Income Tax Department guidance on income-tax forms.

What should you prepare before applying?

Gather the information needed to support your estimated tax liability, including:

• The proposed sale consideration and expected payment dates.

• The original purchase documents and acquisition cost.

• Evidence of qualifying improvement and transfer expenses.

• An estimated capital gains computation.

• Details of potentially applicable exemptions.

• PAN and other supporting information required by the application process.

Apply early enough for the application to be considered before the relevant payment. A certificate is not automatic, and the authorised rate may differ from the rate requested.

Confirm the certificate's validity, conditions and applicability with the buyer. If the certificate is not issued in time, do not assume that the buyer can disregard the otherwise applicable withholding rules.

What if excess TDS has already been deducted?

If the buyer has deducted more tax than your final liability, you may be eligible to claim a refund through the Indian income-tax return process.

The usual steps are:

1. Obtain the buyer's TDS documentation.

2. Verify that the tax credit appears correctly in the relevant tax records.

3. Calculate your actual taxable gain and total tax liability.

4. File the applicable income-tax return and claim any eligible refund.

5. Resolve missing or mismatched tax-credit entries where necessary.

A refund depends on the applicable filing requirements, verification and processing. It should not be treated as guaranteed or immediate.

How does an NRI sell property in India from abroad?

You do not necessarily need to travel to India for every stage of a property sale. However, you must arrange the necessary documents, authorise any representative appropriately and comply with the applicable property, tax and foreign-exchange requirements.

Step 1: Verify ownership and acquisition records

Confirm that the title documents, ownership details and property records are in order. If the property is jointly owned, establish each owner's share and ensure that the transaction documents reflect the correct ownership.

For inherited property, collect the inheritance documents and records needed to establish the previous owner's acquisition history.

Step 2: Estimate capital gains and withholding

Calculate the expected capital gain under the applicable rules. Separately determine the buyer's withholding obligation.

If the expected final tax is significantly lower than the default withholding, investigate a lower or nil deduction certificate before the relevant payment.

Step 3: Agree on the transaction and payment arrangements

Confirm the sale consideration, payment schedule, ownership shares and the buyer's tax-withholding responsibilities.

If the buyer will make instalment payments, establish how withholding and reporting apply to each payment. Do not assume that a single calculation automatically covers every payment arrangement.

Step 4: Complete the sale and retain evidence

Complete the applicable sale and registration formalities. Retain the sale deed, payment records, TDS documentation and supporting evidence of acquisition cost and eligible expenses.

Step 5: Reconcile the tax position

Calculate the final tax liability, verify the available tax credit and file the applicable return. Claim any eligible refund through the prescribed process.

Step 6: Arrange the transfer abroad

Contact your authorised dealer bank to establish the appropriate repatriation route, supporting documents and any limits that apply to the transaction.

Which documents should you prepare before closing?

Requirements vary by transaction, property history, buyer and bank. Use this checklist as a starting point.

This is a preparation checklist, not a universal statutory document list. Confirm the requirements with the buyer, relevant property professionals and authorised dealer bank before the proceeds become due.

Can an NRI sell property through a power of attorney?

A properly authorised representative may be able to handle parts of a property sale on your behalf. Whether you can complete the transaction without travelling depends on the scope of the authorisation, its execution and authentication, and the applicable registration requirements.

If you plan to use a power of attorney, arrange it before the signing stage. Confirm the document's scope and acceptance requirements with the relevant legal professional and registration authority.

How can an NRI transfer property sale proceeds abroad?

An NRI may be able to repatriate eligible property-sale proceeds, but the permitted amount and procedure depend on the acquisition history and the applicable Foreign Exchange Management Act (FEMA) regulations.

There is no single rule that automatically allows every NRI to transfer the entire sale consideration abroad.

The Reserve Bank of India (RBI) distinguishes qualifying property acquired using specified foreign-exchange or non-resident account funds from property acquired through rupee funds, inheritance or other routes. The conditions and limits differ. See the RBI's guidance on repatriation of property-sale proceeds and its remittance-of-assets guidance.

Which repatriation route may apply to your property?

Route 1: Property acquired using qualifying foreign-exchange funds

Under the relevant RBI framework, repatriation of qualifying property-sale proceeds is generally limited by reference to the amount paid to acquire the property through eligible foreign-exchange channels or qualifying non-resident accounts.

For residential property, the relevant facility is restricted to no more than two such properties. Other eligibility conditions must also be satisfied.

Do not assume that the entire sale consideration, including appreciation in value, automatically qualifies under this route. Establish the original funding source and the amount eligible for repatriation.

Any balance not eligible under this specific route may need to be assessed under the applicable NRO remittance facility, subject to its own conditions and limits.

Route 2: Inherited property or property acquired with rupee funds

The applicable remittance-of-assets framework generally permits an eligible NRI to remit up to USD 1 million per financial year from qualifying NRO balances and eligible assets, subject to the relevant conditions and documentation.

This is an overall annual facility, not an automatic additional USD 1 million allowance for each property. The treatment of inherited assets, qualifying acquisitions and other remittances must be assessed under the applicable rules.

Your authorised dealer bank can explain the relevant facility and the evidence required, including declarations, proof of acquisition or inheritance and tax documentation.

What should you do before requesting a remittance?

Contact your bank before initiating the transfer. Be prepared to provide:

• The registered sale deed or other accepted evidence of the sale.

• Evidence of the original purchase funding or inheritance, as applicable.

• Bank records showing receipt of the sale proceeds.

• PAN and other identification details.

• Evidence of applicable tax compliance and the relevant tax computation.

• Additional declarations, certificates or remittance forms requested by the bank.

The bank must assess the actual transaction. Its review may depend on the acquisition route, ownership history, amount to be transferred and applicable regulatory requirements.

What if the property was inherited or jointly owned?

Inherited and jointly owned properties deserve particular attention because acquisition history and ownership shares can affect the tax calculation and supporting documents.

Inherited property

An inherited property is not automatically exempt from capital gains tax when sold.

Establish the previous owner's acquisition details, the applicable cost-basis rules and the holding-period treatment under the relevant law. Retain inheritance documents and supporting evidence of the property's history.

The remittance route must also be assessed separately. Eligibility for a tax exemption does not automatically establish eligibility for unrestricted repatriation.

Jointly owned property

Where two or more people own a property, establish each seller's ownership share and the consideration attributable to that share.

The tax calculation and reporting should reflect the applicable treatment for each owner. If some co-owners are residents of India and others are non-residents, do not assume that the same withholding and reporting procedure applies to everyone.

The buyer should confirm the appropriate procedure for each seller's residential status and ownership share.

What happens if you also live in the USA or another foreign country?

Selling property in India may create tax or reporting obligations in your country of tax residence as well as in India.

The overseas treatment depends on local tax law, the applicable treaty, the property's acquisition history, the timing of the sale and your individual circumstances.

An Indian tax payment does not automatically eliminate reporting obligations abroad. Eligibility for a foreign tax credit or other double-tax relief must be assessed under the relevant country's rules and treaty provisions.

If you are a US tax resident, review the transaction with a professional who understands both Indian property taxation and US tax reporting. Readers living in the UK, Canada, Australia or other countries should obtain equivalent country-specific advice.

Retain the Indian acquisition records, sale deed, tax computation and proof of Indian tax paid. These documents may be relevant to overseas reporting and foreign-tax-credit calculations.

NRI selling property in India: Pre-sale checklist

Before finalising the transaction, confirm that you have:

• Verified the ownership and acquisition history.
• Confirmed the applicable capital gains rules and holding period.
• Collected evidence of eligible acquisition costs, improvements and transfer expenses.
• Evaluated potential exemptions and their conditions.
• Confirmed the buyer's applicable TDS and reporting obligations.
• Considered a lower or nil deduction certificate before payment, if appropriate.
• Arranged the documents needed for execution and registration.
• Established the applicable repatriation route with the authorised dealer bank.
• Planned for the Indian tax return, TDS reconciliation and any eligible refund.
• Considered tax reporting obligations in your country of residence.

Final thoughts

Selling property in India as an NRI requires coordination between the property transaction, capital gains calculation, buyer's TDS, Indian tax filing and repatriation of the proceeds.

The most useful step is to plan your tax and withholding position before closing. Calculate the expected gain, check potential exemptions, determine whether a lower deduction certificate is appropriate and establish the correct remittance route with your bank.

A transaction-specific professional review can help identify documentation gaps, assess the likely tax liability and clarify the appropriate withholding and repatriation procedures before they delay the transaction.