NRI Selling Property in India

An NRI can generally sell eligible residential and commercial property in India, but the transaction involves more than signing a sale deed. The seller may need to coordinate property documentation, buyer-side TDS, capital gains tax, Indian tax filing, banking requirements and FEMA rules.

The correct process also depends on how the property was acquired, whether it was inherited or gifted, how it was funded, whether there are co-owners, and where the sale proceeds will be used.

This guide explains the main steps an NRI should check before selling property in India, including TDS, capital gains, documentation, receiving the sale proceeds and repatriating eligible funds overseas.

Key Takeaways

• NRIs can generally sell eligible residential and commercial property in India, subject to applicable FEMA and property-transfer rules.

• Agricultural land, plantation property and farmhouses have separate FEMA restrictions and should be checked separately.

• FEMA status, Indian tax residency, citizenship and OCI status are different concepts.

• When an NRI sells Indian immovable property, the buyer generally has a TDS obligation under the provisions applicable to payments to a non-resident, rather than the resident-seller property TDS provisions.

• TDS deducted during the transaction is not automatically the seller's final income-tax liability.

• Capital gains depend on the property's acquisition history, holding period, eligible expenses, improvement costs and the law applicable to the transfer.

• For relevant long-term capital-gain transfers on or after 23 July 2024, the applicable LTCG rate is generally 12.5%, with the detailed tax computation depending on the seller's circumstances.

• Repatriating sale proceeds is a separate FEMA and banking process. An eligible NRI/PIO may generally remit up to USD 1 million per financial year from eligible NRO balances or sale proceeds of assets, subject to applicable conditions and taxes.

• From 1 April 2026, the income-tax remittance information form is Form 145, which replaced the earlier Form 145 framework under the Income Tax Rules, 2026. Form 146 corresponds to the earlier Form 146.

Can an NRI sell property in India?

An NRI can generally sell residential and commercial property held in India, subject to the applicable FEMA, property and transfer rules.

Agricultural land, plantation property and farmhouses require separate consideration under FEMA. The exact position can also depend on how the property was acquired and the status of the buyer and seller.

It is important to separate four concepts:

• Tax residency: determines how Indian income-tax rules apply to you.

• FEMA residential status: determines which foreign-exchange rules apply.

• Citizenship: identifies your nationality.

• OCI status: concerns your immigration and overseas citizenship status and does not itself determine Indian tax residency.

For tax residency, the current Income Tax Department guidance continues to use the basic 182-day test and the 60-day plus 365-day test, subject to specific exceptions and special rules for certain Indian citizens and persons of Indian origin.

Therefore, do not determine your tax status only from your passport, OCI card or country of residence.

Read our guide to NRI residential status in India before calculating your Indian tax position.

Why should an NRI coordinate tax, TDS, documents and banking?

An NRI property sale involves several separate compliance questions.

First, the seller must establish ownership and provide documents required for the transaction.

Second, the buyer must apply the correct TDS procedure when making a payment to a non-resident seller. The Income Tax Department specifically distinguishes payments to non-resident sellers from the resident-seller property TDS process under Section 194-IA.

Third, the seller must calculate the actual capital gain and report it in the appropriate Indian tax return.

Finally, if the seller wants to transfer the money outside India, the bank must establish whether the proposed remittance is permitted under FEMA and what supporting tax and banking documents are required.

These are related processes, but they are not the same process.

Step 1: Confirm ownership and acquisition history

Before signing the sale agreement, establish exactly how the property became yours.

Collect:

• Original or certified title documents

• Earlier sale deeds

• Allotment and possession documents

• Mutation or relevant property records

• Property-tax records

• Builder or society records

• Purchase payment evidence

• Improvement invoices

• Details of co-owners

• Inheritance, succession or gift documents where applicable

The acquisition history is particularly important for inherited or gifted property.

Under the capital-gains rules, when an asset is acquired through specified modes such as inheritance or gift, the previous owner's acquisition cost can become relevant and the previous owner's holding period can also be included.

Therefore, an inherited property should not automatically be treated as having a cost of zero or as having a holding period beginning on the date of inheritance.

Step 2: Prepare the documents and Power of Attorney

An NRI should prepare the documents required for both the property transaction and the related tax and banking processes.

A typical document file may include:

• Passport

• Overseas address proof

• PAN

• OCI card, where relevant

• Property title documents

• Earlier purchase documents

• Inheritance or gift documents

• Property-tax records

• Society or builder records

• Bank details

• Co-owner details

• Purchase and improvement payment evidence

• Sale agreement and sale deed

• TDS documentation

• Tax-return and tax-payment records

• Power of Attorney, where applicable

If you cannot attend the transaction personally, a Power of Attorney may allow another person to act on your behalf within the authority granted by the document.

The execution, stamping, notarisation, registration and acceptance requirements for a Power of Attorney can depend on where it is executed and how it will be used. Obtain transaction-specific legal advice rather than relying on a generic format.

The Power of Attorney should clearly identify the property and the powers being granted. Avoid giving broader authority than necessary.

Step 3: Understand the buyer's TDS obligation

When an NRI sells immovable property in India, the buyer must consider the TDS provisions applicable to payments to a non-resident.

The Income Tax Department states that Section 195 applies when a non-resident sells immovable property in India. For relevant long-term capital gains, its current guidance lists:

• 12.5% for transfers on or after 23 July 2024

• 20% for transfers before 23 July 2024

For short-term capital gains on property held for 24 months or less, the current departmental guidance lists different rates depending on the type of non-resident seller. Applicable surcharge and Health and Education Cess may also affect the final withholding rate.

The exact withholding calculation should therefore be confirmed before payment.

TDS is not the same as final tax

This distinction is important.

The buyer's TDS is a withholding mechanism. Your final Indian tax liability is determined through the applicable capital-gains computation, other taxable income, exemptions and the relevant tax provisions.

If the amount deducted is higher than the final tax liability, the excess may be claimed through the tax-return process, subject to the applicable rules.

Where the expected tax liability is lower than the amount otherwise required to be withheld, a lower or nil deduction certificate may be considered. The application should be made before the relevant payment or credit.

For tax years governed by the Income Tax Act, 1961, this process is associated with Section 197 and Form 13. For Tax Year 2026-27 under the Income Tax Act, 2025, the corresponding framework uses Section 395 and Form 128.

Step 4: Calculate capital gains

The capital-gains calculation generally considers:

Sale consideration − eligible transfer expenses − cost of acquisition − eligible cost of improvement = capital gain

The actual computation can be more detailed depending on the property and transaction.

For immovable property, the property is generally treated as a long-term capital asset when held for more than 24 months.

For relevant transfers on or after 23 July 2024, long-term capital gains are generally taxed at 12.5% without indexation for non-residents. The Income Tax Department also states that the special grandfathering option for land or buildings acquired before 23 July 2024 is available to resident individuals and HUFs, so it should not automatically be assumed to apply to an NRI.

Eligible transfer expenses and qualifying improvement costs can affect the taxable gain.

Keep invoices and payment records for improvements rather than relying only on estimates.

Inherited or gifted property

For property acquired through inheritance, gift or another specified mode, the previous owner's acquisition cost can become the relevant cost, and the previous owner's holding period may also be included.

This makes the following documents particularly important:

• Previous owner's purchase deed

• Previous owner's acquisition cost

• Previous improvement records

• Will or succession documents

• Gift deed, where applicable

• Legal-heir or succession documentation

If the previous owner's acquisition cost cannot be established, specific tax rules may determine the cost using the property's fair market value in the circumstances prescribed by law.

Reinvestment exemptions

Depending on the type of property, gain and reinvestment, exemptions under provisions such as Sections 54 or 54EC may be relevant where their statutory conditions are satisfied.

Do not assume an exemption applies merely because you sold a residential property. The type of asset sold, type of new investment, timing, limits and other conditions must be checked.

The Capital Gains Account Scheme can also become relevant where the conditions for a reinvestment exemption are met but the required investment has not yet been completed within the applicable period.

Step 5: Complete the sale and receive the proceeds

The sale agreement and sale deed should accurately reflect:

• Seller and buyer details

• Property details

• Sale consideration

• Payment schedule

• Co-owner shares

• TDS responsibility

• Possession terms

• Registration requirements

• Bank payment instructions

Keep the payment trail fully documented.

Where an NRI uses a Power of Attorney, the authority granted to the attorney should correspond with the transaction and the requirements of the relevant registration authority and bank.

The proceeds may be credited to an appropriate Indian bank account, such as an NRO account, depending on the circumstances and banking requirements.

Do not assume that the account name alone determines whether the money can later be transferred overseas. The property's acquisition source and the nature of the proceeds can affect repatriation.

Step 6: Report the sale in your Indian tax return

The property sale should be reported in the Indian income-tax return for the relevant tax year.

The computation should reconcile:

• Sale consideration

• Transfer expenses

• Acquisition cost

• Improvement costs

• Holding period

• Capital gain

• Eligible exemption

• TDS credit

• Tax already paid, where applicable

Keep the following records together:

• Sale deed

• Purchase deed or acquisition records

• Inheritance/gift documents

• Improvement invoices

• Sale-expense evidence

• TDS certificate

• Bank statements

• Tax-payment evidence

• Reinvestment documents

• Capital Gains Account Scheme records, where applicable

TDS should be reconciled with the tax credit available to you. Do not assume that the amount appearing on the TDS certificate automatically represents your final tax liability.

Step 7: Repatriate eligible sale proceeds

Repatriation is a separate step from the property sale and capital-gains calculation.

RBI rules provide a general facility under which an eligible NRI/PIO may remit up to USD 1 million per financial year from eligible NRO balances and sale proceeds of assets, subject to applicable taxes, documentary requirements and the satisfaction of the authorised-dealer bank.

There are also specific rules for residential property purchased using foreign-exchange funds. RBI guidance provides a separate repatriation route based on the amount originally paid for acquisition through eligible foreign-exchange channels, with a restriction relating to not more than two residential properties.

Therefore, the amount that can be transferred abroad is not determined simply by looking at the property's sale price.

The bank may need to examine:

• Property acquisition documents

• Original payment source

• Sale deed

• Bank statements

• TDS records

• Indian tax-return details

• Tax-payment evidence

• Inheritance or gift documents

• Previous remittances

• Applicable FEMA documentation

Ask your authorised dealer bank for its current document checklist before planning the overseas transfer.

What are the current remittance forms in 2026?

The income-tax remittance reporting framework changed from 1 April 2026.

Under the Income Tax Rules, 2026:

• Form 145 replaced the earlier Form 145.

• Form 146 replaced the earlier Form 146.

• Form 145 has Parts A, B, C and D for different remittance circumstances.

• Part C applies where the taxable remittance exceeds ₹5 lakh during the tax year and the required accountant certificate in Form 146 has been obtained.

• Part B applies where the taxable remittance exceeds ₹5 lakh and the required Assessing Officer certificate has been obtained.

• Part D applies where the remittance is not taxable, subject to the specified exceptions.

The remittance information must generally be furnished before the relevant remittance is made.

Because the procedural rules changed in 2026, do not use an old Form 145/146 checklist for a remittance made under the new framework without confirming which law and form apply.

What changes for inherited, gifted or jointly owned property?

Inherited property

Inherited property requires additional documentation because the previous owner's acquisition cost and holding period can affect the capital-gains calculation.

Keep:

• Will or succession documents

• Legal heir documents

• Previous owner's purchase records

• Previous owner's improvement records

• Property-title documents

Gifted property

For gifted property, retain the gift deed and the donor's relevant acquisition records. The tax computation may use the previous owner's cost and holding period under the applicable provisions.

Jointly owned property

For jointly owned property, establish each owner's legal share and ensure that the sale documents, payment allocation, TDS records and tax reporting are consistent with that ownership.

Do not assume that the person managing the property is automatically the person entitled to all sale proceeds.

What changes if you live in the USA, UK, Canada, Australia or UAE?

Selling Indian property can create tax-reporting obligations in your country of tax residence as well as in India.

For example, a person who is tax resident in the USA may need to consider US reporting and foreign-tax-credit rules. Similar analysis may be required for residents of the UK, Canada or Australia.

The exact treatment depends on the country's domestic tax law, tax-residency status, treaty provisions, citizenship or other relevant factors.

Do not assume that paying Indian capital gains tax automatically completes your foreign tax obligations.

Keep:

• Indian sale deed

• TDS certificate

• Indian tax return

• Indian tax-payment records

• Bank statements

• Repatriation records

• Relevant acquisition documents

These records can help support foreign tax reporting and any foreign-tax-credit claim where permitted under the relevant country's law.

What documents should you keep?

Maintain a secure digital and physical record containing:

• Passport and overseas address proof

• PAN

• OCI/status documents, where relevant

• Title and sale documents

• Previous purchase records

• Inheritance or gift records

• Co-owner information

• Purchase-payment evidence

• Improvement invoices

• Property-tax records

• Sale agreement

• Final sale deed

• TDS records

• Indian tax-return documents

• Tax-payment evidence

• Bank statements

• Reinvestment documents

• Repatriation and remittance documents

NRI Property Sale: Tax, TDS and Repatriation Checklist

What should you do before signing, receiving payment, filing and remitting?

Before signing

Verify:

• Property title

• Co-owner details

• Acquisition history

• Property type

• Tax residency

• FEMA position

• Power of Attorney, if required

• Expected TDS treatment

Before receiving payment

Confirm:

• Sale consideration

• Payment schedule

• TDS procedure

• Indian bank account

• Documentation required by the bank

Before filing the Indian return

Prepare:

• Sale deed

• Acquisition records

• Improvement evidence

• Transfer expenses

• TDS certificate

• Capital gains calculation

• Exemption/reinvestment documents

Before remitting overseas

Ask your authorised dealer bank to confirm:

• Eligible repatriation route

• Applicable FEMA conditions

• Current remittance limit

• Required tax documents

• Form 145 requirements

• Form 146 requirements, where applicable

• Bank-specific documentation

Conclusion

An NRI property sale should be treated as a sequence of connected but separate processes: ownership verification, sale documentation, buyer-side TDS, capital-gains calculation, Indian tax filing, and overseas remittance.

The property's acquisition history can materially affect the tax calculation, particularly where the property was inherited or gifted. The source of funds used to acquire the property can also affect the applicable repatriation route.

For current transactions, verify the applicable tax provisions based on the transfer date and use the current 2026 remittance framework rather than older Form 145/146 instructions. RBI and authorised-dealer bank requirements should also be checked before transferring the proceeds overseas.

If the transaction involves inheritance, joint ownership, a large capital gain, a lower-TDS application or substantial overseas remittance, obtain transaction-specific tax and banking advice before completing the payment.