Selling Property in India as an NRI – Here’s Your Complete Tax & FEMA Guide!
Selling property in India as a Non-Resident Indian (NRI) involves specific tax and Foreign Exchange Management Act (FEMA) regulations. Key steps include understanding capital gains tax, managing Tax Deducted at Source (TDS), adhering to repatriation limits, and ensuring proper documentation.
Selling your flat, plot, or inherited property in India as an NRI comes with a series of tax, TDS, and FEMA compliance steps.
Missing even one can delay your funds or attract penalties so read carefully
1️⃣ Capital Gains Tax Rules:
When you sell property, your tax liability depends on how long you held it:
Short-Term Capital Gains (STCG) if Sold within 24 months of purchase . It is taxed at your slab rate .
Long-Term Capital Gains (LTCG) if sold after 24 months. It taxed at 20% with indexation benefit.
Tip: You can save tax by reinvesting under:
Section 54 – in another residential house
Section 54EC – in NHAI/REC bonds
Section 54F – if sale is of a plot or non-residential asset
2️⃣ TDS (Tax Deducted at Source) by Buyer:
The buyer must deduct TDS before making payment to you:
20% on long-term gains
Upto 30 % on short-term gains
The buyer should then:
✅ Deposit the TDS with the Income Tax Department
✅ Provide you Form 16A (TDS certificate)
If your actual tax is lower, you can apply online for a reduced-rate TDS certificate (Form 13) to avoid excess deduction.
3️⃣ Repatriation of Sale Proceeds under FEMA
Once taxes are settled, you can repatriate (send abroad) the sale proceeds:
Up to USD 1 million per financial year through your NRO account.
Steps for smooth repatriation:
1️⃣ Hire a Chartered Accountant to prepare Form 15CB (tax clearance).
2️⃣ File Form 15CA online on the Income Tax portal.
3️⃣ Ensure the buyer hands over the TDS certificate – it’s mandatory for your CA to complete 15CB.
Only after this can the bank transfer funds abroad under FEMA norms.
4️⃣ Documents You’ll Need:
PAN cards of buyer & seller
Sale deed & original purchase papers
Capital-gains computation
Proof of tax payment & TDS deposit
Form 15CB certificate + Form 15CA acknowledgement
FEMA bank permission (if required)
5️⃣ Double Taxation Relief (DTAA):
If you live in a country that has a DTAA with India, you can claim a tax credit abroad for taxes paid here . This is possible using the clause of avoiding double taxation.
6️⃣ Practical Tips for NRIs:
🔸 Always use official banking channels, not cash.
🔸 Get your TDS certificate early. It’s crucial for repatriation.
🔸 File your ITR in India to adjust any refund or final liability.
🔸 Work with a CA familiar with NRI tax and FEMA rules.
Selling property in India as an NRI isn’t just a real-estate deal , it’s a compliance journey under the Income Tax Act and FEMA .
Proper planning ensures smooth repatriation and zero tax hassle.
Key Reminder:
Always verify that the buyer deducts TDS correctly and shares the certificate. Without it, your CA cannot issue Form 15CB and you can’t repatriate your funds!
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