NRI Selling Property in India

Here's where a lot of confusion creeps in. Most articles, legal opinions, property consultants, and YouTube explainers you'll find online still reference the old section numbers under the 1961 Act. For anyone planning a property sale in India by NRI, it is important to understand these updated provisions. The table below maps them to their equivalents under the Income-tax Act, 2025.

Worth keeping this handy it'll save you from acting on outdated guidance while planning your sale.

What Our NRI Property Sale Services Covers?

For an NRI property sale, getting the tax calculation right is only one part of the process. We provide end-to-end support covering TDS, capital gains, Lower/Nil TDS Certificates, FEMA and RBI compliance, repatriation of sale proceeds, and DTAA advisory to help ensure your property sale is completed efficiently and in full compliance with applicable Indian tax and foreign exchange regulations.

Lower / Nil TDS Certificate (Form 128)

The single biggest pain point for NRIs, OCI holders, and foreign residents selling property is TDS deducted on the gross sale price rather than on the actual gain which routinely exceeds real tax liability by a wide margin. Section 395(1) of the 2025 Act (Section 197 under the old law) lets eligible sellers apply for a Lower or Nil TDS Certificate via Form 128 (formerly Form 13), so tax gets withheld on estimated capital gains instead of the full sale value better cash flow, and one less refund to chase down later. We handle the capital gains computation, prepare the Form 128 application, review your documents, represent you before the Income Tax Department, and follow through until the certificate comes through.

Capital Gains Tax Planning

This genuinely works better starting before you sign the sale agreement, not after. We work through long-term versus short-term capital gains, your original acquisition history, cost inflation index calculations, the specific rules for inherited or gifted property, joint ownership considerations, and how DTAA fits into the picture with the goal of legally minimizing what you owe while staying fully compliant.

TDS Compliance

Under Section 393(2) of the 2025 Act (Section 195 previously), the buyer is required to deduct tax before paying you. We help determine the correct TDS rate, review the buyer's compliance obligations, sort out TAN-related requirements, reconcile what's actually been deducted and deposited, and resolve disputes if the numbers don't add up, all of which leads to notices and penalties later.

FEMA and RBI Advisory

Property sales by NRIs sit under FEMA and RBI regulation on top of the income tax rules. We verify ownership, review how the property was originally acquired, check FEMA eligibility, review RBI compliance, plan the repatriation route, and structure your NRO/NRE accounts correctly so the transaction closes smoothly and the funds actually move where they're supposed to.

Repatriating the Sale Proceeds

For most NRIs, the whole point of the sale is getting the money back wherever you live. We prepare Form 145, certify Form 146, handle the FEMA paperwork, coordinate with the banks, plan the repatriation strategy, and put together the source-of-funds documentation aiming for a transfer that's smooth, timely, and fully compliant.

DTAA Advisory

If you're in the US, Canada, UK, UAE, Singapore, Australia, New Zealand, or one of several European countries, you may well need to report this sale in your country of residence too. We handle foreign tax credit planning, work through double-taxation mitigation, help with capital gains reporting on the other side, and interpret the specific treaty provisions that apply so you're not paying tax twice on the same gain.

Section 195 vs. Section 393(2) - TDS on an NRI Property Sale

Under the earlier 1961 Act, TDS on property sold by an NRI was covered under Section 195; under the 2025 Act, this provision is now covered by Section 393(2). In either case, the buyer is required to deduct tax before making the payment to you.

Long-term capital gains apply if you've held the property for more than 24 months currently taxed at 12.5% plus surcharge and cess. Short-term capital gains apply for anything held 24 months or less, taxed at your applicable slab rate. In practice, though, buyers routinely deduct at a flat 30% plus surcharge and cess as a conservative default, simply because they have no visibility into your overall taxable income.

What actually determines the withholding: your residential status, whether the gain is long-term or short-term, whether you've secured a Lower TDS Certificate, any DTAA relief, and the applicable surcharge and cess. A common misconception is that TDS gets calculated only on the capital gain in reality, buyers deduct on the gross sale price unless you've already obtained a Lower TDS Certificate to redirect that.

Section 197 vs. Section 395(1) - The Lower TDS Certificate

The Lower TDS Certificate is arguably the single most valuable planning tool available to an NRI seller; it aligns what actually gets withheld with your real tax liability instead of the gross sale price. Under the 1961 Act this ran through Section 197 and Form 13; under the 2025 Act it's Section 395(1) and Form 128.

The upside is straightforward: less tax withheld at closing, better liquidity, a faster transaction close, and far less waiting around for a refund that shouldn't have been necessary in the first place.

Section 54EC vs. Section 85 - Capital Gains Bonds

Investing in specified capital gains bonds remains one of the more commonly used ways to claim exemption from long-term capital gains tax, subject to the usual conditions. This ran under Section 54EC previously; it's Section 85 now. Eligible options generally include NHAI bonds, REC bonds, and other notified capital gains bonds. The investment needs to happen within the prescribed window from the date of transfer missed that window and the exemption doesn't apply, so this is worth planning before the sale closes, not after.

Section 54 vs. Section 82 - Exemption on Residential Property

If you reinvest the gains from selling a residential property into another qualifying residential property, within the specified timelines, you may be able to claim exemption that sat under Section 54 before, and is Section 82 now. It remains one of the most-used provisions for NRIs selling property in India, and structured properly, it can meaningfully cut down the overall tax bill.

Section 54F vs. Section 86 - Reinvestment Exemption

Selling certain long-term capital assets and reinvesting the net sale consideration into a qualifying residential property can also open up an exemption Section 54F under the old law, Section 86 now. As with the other reinvestment routes, the benefit depends on meeting the prescribed conditions and timelines, so it's worth mapping out before you sign anything.

Form 15CA/15CB vs. Form 145/146 - Repatriation Paperwork

Banks and authorized dealers used to ask for Form 15CA and Form 15CB before processing an overseas remittance. Under the 2025 Act, those have been replaced by Form 145 and Form 146. Functionally, they do the same job supporting tax compliance and confirming the remittance is legitimate under both income tax and FEMA rules. We handle the documentation, the certifications, the FEMA side, and the bank coordination needed to get funds moved without unnecessary delay.

NRI Property Sale in India - Tax, TDS, DTAA, FEMA & Repatriation Rules by Country

Whether you are selling from the USA, Canada, UK, UAE, Australia, or elsewhere, our cross-border advisory helps manage Indian tax, foreign reporting, DTAA, FEMA, TDS, and repatriation requirements.

NRIs in the USA often carry reporting obligations on both sides; we handle capital gains reporting, foreign tax credit planning, Form 1116 support, and FATCA/FBAR guidance alongside the Indian side of the transaction.

NRIs in Canada may need to report the sale to the CRA. We work through CRA reporting requirements, DTAA planning, and foreign tax credit strategy to keep the tax bill from doubling up.

NRIs in the UK frequently need to report the gain to HMRC. We support HMRC reporting, apply the India-UK DTAA, and plan foreign tax credits accordingly.

NRIs in the UAE usually need Indian-side guidance specifically, since UAE doesn't tax personal income. Our focus there is Indian tax planning, FEMA compliance, and getting the repatriation right.

NRIs in Australia typically carry reporting obligations in both countries. We handle the cross-border planning, foreign tax credit optimization, and DTAA advisory needed to avoid double taxation.

OCI card holders face largely the same rules as NRIs but with a few extra wrinkles around FEMA and residency status worth checking we cover the full range from tax planning through Lower TDS Certificates to remittance documentation.

Common Mistakes NRIs Make While Selling Property in India

The most common pattern is that the focus goes entirely into finding a buyer and closing the deal, while tax and compliance planning becomes an afterthought. This usually shows up as:

• Not applying for a Lower TDS Certificate before the sale
• Signing the agreement before checking available tax-saving options
• Ignoring DTAA benefits in your country of residence
• Assuming the TDS deducted by the buyer is your final tax liability it usually isn't
• Getting capital gains and exemption calculations wrong
• Not planning the repatriation of sale proceeds properly
• Missing FEMA and RBI requirements
• Having incomplete documentation for an inherited or gifted property

Planning before you start the sale process, not after the agreement is signed, is what actually protects your tax position, your cash flow, and how smoothly the funds move once the deal closes.

Why Clients Work With Us?

Twenty-five-plus years in this practice, more than 10,500 NRI clients globally, offices in India, the US, UK, and Canada, and a team built specifically around NRI tax Chartered Accountants, CPAs, and ACCAs with real depth in DTAA and FEMA, not generalist advisors bolting on cross-border work. We handle the property sale start to finish: Lower TDS Certificate work, capital gains planning, FEMA compliance, and the repatriation itself.

In the Press

Our Chartered Accountants get quoted regularly on NRI taxation, FEMA compliance, property sale tax, and cross-border planning. A few recent mentions:

• NRI Property Purchase: Why The Seller's Residential Status Matters – Outlook Money
• Planning to Gift Property to Your Spouse? LTCG May Still Be Taxed in Your Hands – Hindustan Times
• NRI Bought Rs 66-Lakh Property in India, Paid TDS but Didn't File ITR, Got Tax Notice and Won Relief in ITAT Ahmedabad – Economic Times