Selling a flat or land in India as an NRI is very doable — but the tax and TDS rules are stricter than for residents, and the money can't just be wired abroad freely. Here's the end-to-end process so nothing surprises you.
Capital gains tax
- Long-term (held > 24 months): taxed at the long-term capital gains rate, with indexation benefits on cost in most cases.
- Short-term (held ≤ 24 months): gains added to income and taxed at slab rates — usually much higher.
You can reduce or defer long-term gains by reinvesting in another Indian residential property (Section 54) or in specified bonds (Section 54EC), subject to conditions.
The TDS shock
Here's what catches NRIs off guard: when an NRI sells property, the buyer must deduct TDS on the entire sale value (not just the gain) — typically a high rate (20%+ plus surcharge/cess for long-term). On a ₹1 crore sale that's a large sum withheld up front.
The fix: apply to the Income Tax Department for a Lower/Nil Deduction Certificate (Form 13) before the sale, so TDS is deducted only on the actual gain — not the full price. This alone can free up lakhs of working capital. Otherwise you claim the excess back as a refund when you file, which takes months.
Repatriating the proceeds
- Sale proceeds go into your NRO account first.
- Repatriate abroad within the USD 1 million per financial year limit.
- You'll need Form 15CA + 15CB (CA certificate) for the remittance.
- Selling more than $1M worth? Plan to spread remittance across financial years.
Step-by-step
- Get a valuation and compute expected capital gains.
- Apply for a Lower Deduction Certificate (Form 13) before closing.
- Sell; buyer deducts TDS at the certificate rate.
- Proceeds land in NRO; pay any remaining tax.
- File 15CA/15CB and repatriate within the $1M limit.
This article is educational and not tax, legal, or investment advice. Cross-border rules change and depend on your specific residency and country. Confirm your situation with a qualified cross-border CA/CPA before acting.
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Frequently asked
How much TDS is deducted when an NRI sells property? On long-term sales, generally 20% plus surcharge and cess on the full sale value — unless you obtain a Lower Deduction Certificate to base it on the gain.
Can I repatriate the entire sale amount? From the NRO account, up to USD 1 million per financial year. Larger amounts spread across years.