Selling property in India as a Non-Resident Indian (NRI) can be a great opportunity — but it comes with specific legal, tax, and procedural responsibilities. One of the most important aspects is TDS (Tax Deducted at Source). This article explains everything you need to know — from rules and exemptions to how to reduce tax burden legally.
✅ Who is an NRI?
An NRI (Non-Resident Indian) is a citizen of India or a person of Indian origin who resides outside India for employment, business, or other reasons.
🧾 Can an NRI Sell Property in India?
Yes, NRIs can sell property in India. However, some rules apply:
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Residential or Commercial Property: Can be sold to an Indian resident, another NRI, or a PIO (Person of Indian Origin).
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Agricultural Land or Plantation Property: Can only be sold to a resident Indian (not to another NRI or PIO).
💰 What is TDS on Sale of Property?
When an NRI sells property in India, the buyer must deduct TDS before making the payment.
TDS Rates:
| Property Type | Sale Price | TDS Rate |
|---|---|---|
| Long-Term Capital Gain (held > 2 yrs) | Any | 12.5% + surcharge + cess |
| Short-Term Capital Gain (held ≤ 2 yrs) | Any | As per income tax slab (up to 30% or more) |
⚠️ Note: This TDS is much higher than the 1% for resident sellers.
📉 How to Reduce TDS Legally?
NRIs can apply for a Lower or Nil TDS Certificate from the Income Tax Department under Section 197.
Steps:
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File Form 13 online via TRACES.
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Submit documents like sale agreement, purchase deed, cost of acquisition, PAN, etc.
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Once approved, you get a certificate directing the buyer to deduct lower or zero TDS.
📑 Capital Gains Tax for NRIs
1. Short-Term Capital Gains (STCG):
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Property held for ≤ 2 years
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Taxed as per applicable slab rates
2. Long-Term Capital Gains (LTCG):
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Property held for > 2 years
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Taxed at 12.5% without indexation
🛡️ Exemption from Capital Gains Tax
You can save tax by reinvesting the capital gain under the following sections:
✅ Section 54:
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Reinvest in another residential property in India
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Must be purchased within 1 year before or 2 years after sale
✅ Section 54EC:
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Invest in NHAI or REC bonds
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Up to ₹50 lakhs within 6 months of sale
📌 Documents Required for Sale
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PAN Card (mandatory)
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Passport and Visa (proof of NRI status)
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Property Title Deed
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Sale Agreement
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TDS Certificate (Form 16A)
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Tax Residency Certificate (optional)
🏦 Repatriation of Sale Proceeds
NRIs can repatriate sale proceeds to their country of residence under FEMA rules, subject to conditions:
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Property must have been purchased via inward remittance or NRE/FCNR account.
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Maximum repatriation: USD 1 million per financial year.
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Must submit Form 15CA/CB (certified by a CA).
🧮 Illustration
Example:
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NRI sells property for ₹1.5 crore
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Indexed cost of acquisition: ₹80 lakhs
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LTCG = ₹70 lakhs
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TDS = ~23.92% of ₹1.5 crore = ₹35.88 lakhs (unless lower TDS certificate is obtained)
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Final tax on ₹70 lakhs LTCG = ₹14 lakhs (approx. with indexation)
➡️ Refund of excess TDS can be claimed while filing ITR.
📝 Conclusion
Selling property in India as an NRI requires careful planning to handle TDS, capital gains, and repatriation. Applying for a lower TDS certificate and utilizing capital gains exemptions can help maximize your returns and minimize tax burden.
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