NRI Selling Indian Property? 5 Tax Traps to Avoid

NRIs buying or selling property in India face strict FEMA rules, high TDS rates, and power of attorney pitfalls. One missing document can freeze your money or trigger a tax demand. Here's what you must know before signing anything.

Here's what happened: FEMA rules strictly govern what types of Indian property NRIs can buy or sell, with agricultural land and farmhouses off-limits for NRI-to-NRI transfers.. TDS on NRI property sales is mandatory for the buyer, and the rate shoots up sharply when the NRI seller does not furnish a valid Indian PAN card.. Repatriation of sale proceeds overseas requires a CA-certified Form 15CA/15CB and is capped at USD 1 million per financial year under RBI guidelines..

What you should do: Apply for or renew your Indian PAN card immediately — even before listing the property — to avoid the punishing higher TDS rate on the full sale value.. Hire a CA experienced in FEMA and NRI taxation to prepare Form 15CA and 15CB before remitting any sale proceeds abroad; banks will not process the transfer without these.. Ensure any Power of Attorney granted to a representative in India is notarised, apostilled in your country of residence, AND registered with the Indian sub-registrar — verify all three steps, not just one..

NRIs can apply to the Income Tax Officer for a lower TDS certificate (Form 13) before the sale — if approved, the buyer deducts tax only on actual capital gains, potentially saving lakhs versus the default rate.

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