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Selling property in India as an NRI or OCI is not merely a real estate transaction it is a tax, FEMA, and cross-border compliance event. Whether you are selling a residential property, commercial property, inherited property, gifted property, jointly owned property, or investment real estate, the transaction may trigger capital gains tax, TDS obligations, Lower TDS Certificate requirements, FEMA compliance, DTAA implications, repatriation procedures, and tax reporting obligations both in India and abroad.
Many NRIs unknowingly lose lakhs of rupees through excessive TDS deductions, delayed tax refunds, incorrect capital gains calculations, FEMA non-compliance, and missed tax-saving opportunities.
At Dinesh Aarjav & Associates, we provide end-to-end advisory services for NRIs, OCIs, PIOs, Green Card Holders, foreign citizens of Indian origin, and overseas Indians selling property in India. Our team assists with Lower/Nil TDS Certificates, capital gains tax planning, FEMA compliance, repatriation of sale proceeds, DTAA advisory, tax return filing, and post-sale compliance under the Income-tax Act, 2025.
With over 25 years of experience, offices across India, USA, UK, and Canada, and more than 10,500+ NRI clients served globally, we help NRIs navigate property transactions efficiently while maximizing tax savings and ensuring complete compliance.
Unlike resident Indians, NRIs are governed by special withholding tax provisions and FEMA regulations when selling immovable property in India.
A property sale transaction may involve:
Without proper planning, NRIs often face unnecessary tax deductions, blocked funds, delayed refunds, and avoidable compliance risks.
One of the most common areas of confusion for NRIs is the transition from the Income-tax Act, 1961 to the Income-tax Act, 2025.
Most tax articles, legal opinions, property consultants, YouTube videos, and online forums continue to refer to the old section numbers. The corresponding provisions under the Income-tax Act, 2025 are summarized below:
| Income Tax Act, 1961 | Income Tax Act, 2025 | Purpose |
| Section 195 | Section 393(2) | TDS on payments to Non-Residents |
| Section 197 | Section 395(1) | Lower / Nil TDS Certificate |
| Form 13 | Form 128 | Application for Lower TDS Certificate |
| Section 54 | Section 82 | Capital Gains Exemption – Residential House |
| Section 54EC | Section 85 | Capital Gains Exemption through Specified Bonds |
| Section 54F | Section 86 | Capital Gains Exemption through Reinvestment |
| Form 15CA | Form 145 | Foreign Remittance Declaration |
| Form 15CB | Form 146 | Chartered Accountant Certificate for Remittance |
This comparison helps NRIs understand both the legacy provisions and the new legal framework while planning a property transaction.
One of the biggest challenges faced by NRIs, OCI card holders and foreign residents while selling property in India is the deduction of excessive TDS on the gross sale consideration, which often exceeds their actual tax liability.
Under Section 395(1) of the Income-tax Act, 2025 (earlier Section 197 of the Income-tax Act, 1961), eligible sellers can apply for a Lower or Nil TDS Certificate by filing Form No. 128 (earlier Form No. 13) before the Income Tax Department.
Obtaining a Lower TDS Certificate allows tax deduction on the basis of estimated capital gains rather than the entire sale consideration, thereby improving cash flow and minimizing dependency on future tax refunds. Our team assists clients with capital gains computation, Form 128 preparation, document review, representation before the Income Tax Department, follow-up for approvals and obtaining the lower deduction certificate.
Effective tax planning should ideally commence before execution of the sale agreement to ensure proper structuring of the transaction and optimization of available tax benefits.
Our advisory services include long-term capital gains analysis, short-term capital gains analysis, historical acquisition review, cost inflation index calculations, taxation of inherited properties, taxation of gifted properties, joint ownership planning and evaluation of Double Taxation Avoidance Agreement (DTAA) implications.
We assist NRIs in legally minimizing tax liabilities while ensuring complete compliance with applicable tax laws and regulations.
Under Section 393(2) of the Income-tax Act, 2025 (earlier Section 195 of the Income-tax Act, 1961), purchasers acquiring property from NRIs are required to deduct tax at source before making payment to the seller.
Our advisory services cover TDS rate determination, buyer compliance review, TAN-related compliance, TDS deposit advisory, TDS reconciliation, tax withholding reviews and resolution of TDS-related disputes.
Proper planning and compliance help prevent future notices, penalties and unnecessary litigation with the tax authorities.
Property sale transactions involving NRIs are governed not only by income tax laws but also by the provisions of the Foreign Exchange Management Act (FEMA) and related RBI regulations.
Our FEMA advisory services include verification of property ownership, review of source of acquisition, FEMA eligibility assessment, RBI compliance review, repatriation planning and NRO/NRE account structuring.
These services ensure smooth execution of the transaction and seamless movement of funds in compliance with applicable foreign exchange regulations.
For most NRIs, the ultimate objective after selling property in India is the lawful transfer of sale proceeds to their country of residence.
We assist clients with Form 145 preparation, Form 146 certification, FEMA documentation, coordination with banks, repatriation strategy and preparation of source of funds documentation.
Our objective is to facilitate smooth, timely and fully compliant transfer of funds outside India while meeting all regulatory requirements.
NRIs residing in countries such as the USA, Canada, United Kingdom, UAE, Singapore, Australia, New Zealand and various European jurisdictions may also be required to report the property transaction in their country of tax residence.
Our DTAA advisory services include foreign tax credit planning, double taxation mitigation strategies, capital gains reporting assistance, treaty interpretation and comprehensive cross-border tax advisory.
These services help clients avoid double taxation and maximize the tax relief available under applicable tax treaties while ensuring full compliance in both jurisdictions.
Historically, TDS on sale of property by NRIs was governed by Section 195 of the Income-tax Act, 1961.
Under the Income-tax Act, 2025, the corresponding withholding provision is Section 393(2).
The buyer is required to deduct tax before making payment to the NRI seller.
Long-Term Capital Gains (LTCG) on NRI Property Sale
If the NRI seller has held the property for more than 24 months, the gains are treated as Long-Term Capital Gains.
TDS Rate on LTCG - 12.5% + Surcharge + Cess
Short-Term Capital Gains (STCG) on NRI Property Sale
If the property is held for 24 months or less, gains are treated as Short-Term Capital Gains.
TDS Rate on STCG
Short-Term Capital Gains are taxable at applicable slab rates.
In practical scenarios, buyers usually deduct TDS at 30% + Surcharge + Cess as a conservative measure because the buyer generally does not know the overall taxable income of the NRI seller.
Important factors affecting withholding include:
Many NRIs mistakenly assume TDS is calculated only on capital gains. In practice, buyers often deduct tax on the gross sale consideration unless a Lower TDS Certificate is obtained.
One of the most valuable tax planning opportunities available to NRIs selling property in India is obtaining a Lower TDS Certificate. This mechanism helps align tax deduction with the seller's actual tax liability and prevents excessive withholding of funds.
Under the earlier Income-tax Act, 1961, applications for lower deduction of tax were governed by Section 197 and were filed through Form 13. Under the Income-tax Act, 2025, the corresponding provision is Section 395(1), and applications are now made through Form 128.
A Lower TDS Certificate ensures that tax is deducted on the basis of actual tax liability or estimated capital gains rather than on the gross sale consideration, thereby reducing unnecessary blockage of funds.
Key benefits of obtaining a Lower TDS Certificate include:
Another widely used tax planning strategy available to NRIs is investment in specified capital gains bonds. This option enables eligible taxpayers to claim exemption from long-term capital gains tax, subject to fulfillment of prescribed conditions under the Income-tax Act.
Under the earlier Income-tax Act, 1961, this exemption was available under Section 54EC. Under the Income-tax Act, 2025, the corresponding provision is contained in Section 85.
Eligible investments generally include specified capital gains bonds issued by approved institutions and government-backed entities.
To claim the exemption, the investment must generally be completed within the prescribed time limit from the date of transfer of the property. Proper planning is essential to ensure compliance with the investment conditions and maximize the available tax benefits.
NRIs may be eligible to claim exemption from long-term capital gains tax arising from the sale of residential property in India through reinvestment in accordance with the provisions of the Income-tax Act.
Under the earlier Income-tax Act, 1961, such exemption was available under Section 54. Under the Income-tax Act, 2025, the corresponding provision is contained in Section 82.
Subject to the prescribed conditions, exemption may be available where the capital gains are reinvested in a qualifying residential property within the timelines and parameters specified under the law.
This continues to be one of the most commonly utilized tax planning provisions for NRIs selling property in India and can substantially reduce the overall capital gains tax liability when properly structured.
NRIs selling certain long-term capital assets may be eligible to claim exemption from capital gains tax by reinvesting the net sale consideration into a qualifying residential property, subject to the conditions prescribed under the Income-tax Act.
Under the earlier Income-tax Act, 1961, this exemption was available under Section 54F. Under the Income-tax Act, 2025, the corresponding provision is contained in Section 86.
The exemption may be available where the prescribed amount of sale consideration is reinvested in a qualifying residential property within the timelines and conditions specified under the law.
Proper tax planning before execution of the sale transaction can significantly enhance available tax benefits, optimize capital gains exemptions and ensure full compliance with applicable tax regulations.
Historically, banks and authorized dealers required the submission of Form 15CA and Form 15CB for processing overseas remittances and ensuring compliance with applicable tax regulations.
Under the Income-tax Act, 2025, these forms have been replaced by Form 145 and Form 146 respectively, which are now used for reporting and certifying eligible foreign remittances.
These forms facilitate overseas remittances, support tax compliance requirements and help ensure that foreign transfers are carried out in accordance with applicable income tax and FEMA regulations.
Our team assists clients with complete documentation, tax certifications, FEMA compliance requirements, coordination with banks and comprehensive remittance planning to ensure smooth and timely transfer of funds outside India.
NRIs residing in the United States may have tax reporting obligations in both India and the USA upon the sale of property in India. Our advisory services include capital gains reporting, foreign tax credit planning, Form 1116 support, FATCA compliance, FBAR reporting guidance and comprehensive cross-border tax compliance assistance.
NRIs residing in Canada may be required to report Indian property transactions to the Canada Revenue Agency (CRA). We assist with CRA reporting requirements, DTAA planning, foreign tax credit advisory and strategies to minimize double taxation while ensuring compliance in both countries.
NRIs residing in the United Kingdom may need to report gains arising from Indian property transactions to HMRC. Our services include HMRC reporting support, India-UK DTAA advisory, foreign tax credit planning and cross-border tax compliance assistance.
NRIs residing in the UAE often require specialized guidance on Indian tax implications arising from property sales. We provide Indian tax planning, FEMA compliance advisory, repatriation support, capital gains planning and end-to-end assistance for smooth transfer of funds outside India.
NRIs residing in Australia may have reporting obligations in both India and Australia. Our advisory services include cross-border tax planning, foreign tax credit optimization, capital gains reporting, DTAA advisory and comprehensive compliance support to help avoid double taxation.
OCI Card holders selling property in India often face complex requirements involving taxation, TDS, capital gains exemptions, FEMA regulations and repatriation procedures. Our comprehensive advisory services cover tax planning, Lower TDS Certificate assistance, FEMA compliance, remittance documentation, DTAA advisory and end-to-end transaction support to ensure a smooth and compliant property sale process.
NRIs selling property in India often focus solely on finding a buyer and completing the transaction. However, inadequate tax planning and compliance can result in higher taxes, blocked funds, penalties and delays in repatriation of sale proceeds.
Some of the most common mistakes made by NRIs while selling property in India include:
Proper planning before initiating the sale process can significantly reduce tax liability, improve cash flow, avoid compliance issues and ensure smooth transfer of funds both within and outside India.
Our Chartered Accountants are regularly quoted by leading financial publications on NRI taxation, FEMA compliance, property sale taxation, capital gains and cross-border tax planning.
Need assistance with an NRI property transaction? Explore our published references:
A person who is not a resident of India is considered a Non-Resident of India (NRI). You are a resident if your stay in India for a given financial year is: 182 days or more 60 days or more and 365 days or more in the 4 immediately preceding previous years. In case one does not satisfy either of the above conditions, one will be considered an NRI.
An NRI, like any other individual taxpayer, must file return of income in India if gross total income received in India exceeds Rs 2.5 lakh for any given financial year. Further, the due date for filing a return for an NRI is also 31 July of the assessment year or extended by the Government.
If there is a rental income in India, then Income tax return needs to be filed in India mentioning the PAN and tax to be paid. Also to note, that though holding one property in India is considered as ‘self-owned’, a second property, even if it is not on rent, is considered ‘deemed rented’ and tax needs to be paid for that. One can, however, show 30% of the deemed rental as ‘maintenance cost’. There is no tax to be paid abroad (say, USA) on ‘deemed’ income, but declaring it is important as during repatriation of funds from India, it should not cause any issue.
If an NRI receives income in India, such income is taxable in India, i.e. India as a source state has the right to tax such income. However, the country where such NRI is a resident will also have a right to tax such income as it is the residence state. This way, the NRI will end up getting taxed twice on the same income. To overcome this, India has entered into DTAAs with various countries. It will help eliminate double taxation by allowing the taxpayer to claim credit for foreign taxes paid while filing their return of income in the home country.
No, The Income tax Act applies to all persons who earn income in India. Whether they are resident or non-resident.
In case of resident individuals and companies, their global income is taxable in India. However non-residents have to pay tax only on the income earned in India or from a source/activity in India.
Yes, The dividend declared by Indian companies is taxable in the hands of the shareholders at the rate of 20.00% without providing for deduction under any provision of Income Tax Act.
You can authorize any person by way of a Power of Attorney to file your return. A copy of the Power of Attorney should be enclosed with the return.
Yes, if an NRI’s tax liability is expected to exceed Rs. 10,000 in a financial year, he must pay advance tax. Interest under Section 234B and Section 234C will be levied if advance tax is not paid.
In the event of sale of immovable property other than agricultural land / farm house / plantation property in India by a NRI / PIO, the Authorised Dealer will allow repatriation of the sale proceeds outside India, provided the immovable property was acquired by the seller in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of these regulations
Yes, NRI can do so by way of executing power of attorney in favor of person residing in India. Such POA must be legalized & apostille in home country & thereafter it must be registered in the state in which the property is located.
Yes. TDS provisions apply under Section 393(2) of the Income-tax Act, 2025 (earlier Section 195 of the Income-tax Act, 1961).
Yes. NRIs may apply under Section 395(1) through Form 128 (earlier Section 197 and Form 13).
Yes. Exemptions may be available under Sections 82, 85, and 86 subject to eligibility.
Yes, subject to FEMA regulations and banking requirements.
Yes. Capital gains taxation generally applies, although special computation rules may apply.
Yes. A properly executed Power of Attorney can be used.
Generally yes, although FEMA and residency-related considerations should be reviewed.
We regularly assist NRIs and OCIs residing in the USA, Canada, UK, UAE, Singapore, Australia, New Zealand, and Europe.
FCA, B.Com (H)
MBA (Int'l Banking & Finance), LLB, B. Com (H)
ACA, CISA, B. Com (H)
FCA, B.Com (H)
FCA, B.Com (H)
CA, B.Com
FCA, B.Com (H)
MBA (Int'l Banking & Finance), LLB, B. Com (H)
ACA, CISA, B. Com (H)
FCA, B.Com (H)
FCA, B.Com (H)
CA, B.Com
An Experienced Chartered Accountant with over 5 years of expertise in cross-border taxation, NRI taxation, and US tax compliances. She has extensive exposure in handling complex international tax matters, including India-US taxation, DTAA advisory, foreign disclosures, expatriate taxation, and tax planning for NRIs and returning Indians.
She is a Chartered Accountant and a Commerce Graduate, with strong proficiency in US tax filings and global tax advisory services.
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