NRI Selling Property in India Tax Implications

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Key Takeaways: If you are selling property in India, you are liable to pay capital gains tax. However, you can invest it in specific ways to reduce your tax liability. You can also repatriate the proceeds abroad but within limits. Our tax guide to selling property tells you all that you need to know.

Like many NRIs, you may have invested in real estate in India during the property boom. Now, you have a good offer from a buyer and you decide to sell it. One of the crucial things for you to consider is your tax liability.

Tax implications for NRIs selling property in India¹

Your tax liability on a property sale will depend on how long you have held it. If you are selling a property that you have owned for more than two years, then you will incur a long term capital gains tax. For a property owned for less than two years, you must pay short term capital gains tax². The tax rates are as follows:

As per Budget 2025, if the property was acquired before 23 July 2024, you can choose between paying 12.5% without indexation or 20% with indexation.
For properties purchased after 23 July 2024, LTCG is taxed at a flat 12.5% without indexation.
Short-term capital gains are taxed as per your income slab

These rates apply before surcharge and cess, which are calculated based on total income. Capital gains is the difference between your acquisition price and your sale price minus any expenses you may have incurred in making the sale (brokerage, stamp duty, registration charges, etc.).

Tax deducted at source (TDS)*

As per updated provisions, TDS on long-term capital gains is deducted at 12.5% plus applicable surcharge and cess, unless the seller opts for indexation (20%).
For short-term capital gains, TDS is deducted at 30% plus surcharge and cess.

Ready reckoner for LTCG TDS rates

The following TDS rates apply only if the seller opts for the 20% long-term capital gains tax with indexation (available for properties acquired before 23 July 2024).

Properties valued less than INR 50 lakh: Total tax 20.8% (including surcharge and cess)
Properties valued between INR 50 lakh and INR 1 crore: Total tax 22.88%
Properties valued above INR 1 crore: Total tax 23.92%

For sellers opting for the default 12.5% LTCG without indexation, TDS will be lower and based on updated surcharge and cess slabs.

Open an NRI Savings Account

TDS at a lower rate

If tax deducted at source is more than your tax liability, then you can opt for a tax refund at the end of the year for the excess TDS. However, if you wish to avoid this cumbersome process, you can apply for a certificate that allows you to file for a lower TDS rate⁴ . Please note that you must apply before you execute the sale agreement. The assessing officer will determine the TDS after calculating the capital gains. This will put the money in your hands instantly instead of waiting for a refund. This option remains available whether you opt for the 12.5% flat tax (no indexation) or the 20% indexed tax (if eligible).

Tax exemption

Capital gains made through the sale of a property can be reinvested in India to reduce tax liabilities. If you invest the capital gains in buying another property within two years, then the profit generated from the sale is exempted from tax. Similarly, this exemption under Section 54EC applies whether you are taxed at 12.5% without indexation or at 20% with indexation (if eligible). These bonds offer an interest rate of around 5.25% p.a.* and have a lock-in of five years.⁵

Repatriation of funds

If you wish to repatriate the proceeds from the sale of a property, you will need to submit Forms 15CA and 15CB. While you can fill out and submit Form 15CA yourself, Form 15CB has to be signed and submitted by a chartered accountant. This USD 1 million yearly cap applies under RBI's rules for remittances from NRO accounts, covering proceeds from property sales and other capital account transactions.

Final Note: Several professionally managed firms cater to international clients and provide property management services. You can avail end-to-end services from these experienced professionals who can help with taxation, regulatory compliances and money transfers.

An easy way to repatriate funds back to your country of residence is through NRI accounts. Specifically for income earned in India from a property sale, you will need an NRO account. Are you looking to open one immediately? Apply Now for DBS Treasures.

*TDS rates mentioned in this article are applicable as of April 2020 and will be subject to change as per changes in Indian Tax laws and regulations.

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*TDS and interest rates mentioned in this article are applicable as of April 2020 and will be subject to change.

Disclaimer: This article has been shared purely from an information perspective and we recommend you conduct extensive research before proceeding.