NRIs Selling Indian Property
If you're an NRI selling a house or plot in India, the tax rules have changed and they're not in your favour. Higher TDS rates and revised capital gains tax apply to your sale. But with the right planning — indexation, exemptions, and reinvestment options — you can legally reduce your tax bill significantly.
An NRI selling a property worth ₹1 crore in India could face TDS deduction of up to ₹20–23 lakh upfront — that's more than many Indian salaried employees earn in an entire year — before they even receive the remaining sale proceeds.
As an NRI selling property in India, the buyer is required to deduct TDS at 20–23% of the entire sale value — not just your profit — which means your actual cash in hand could be far less than you planned unless you take proactive steps.
Key Takeaways
Apply for a Lower TDS Certificate from the Income Tax Department (Form 13) before the sale closes — this can reduce the TDS deducted at source from 20%+ to your actual tax liability, freeing up cash immediately
Reinvest your long-term capital gains into a new residential property (Section 54) or into Capital Gains Bonds under Section 54EC (up to ₹50 lakh) within 6 months of the sale to legally avoid paying capital gains tax
Hire a tax consultant familiar with DTAA (Double Taxation Avoidance Agreements) — India has treaties with 90+ countries, and NRIs from the US, UK, UAE, and others may be able to offset Indian tax paid against their home country's tax obligation
Selling property in India as an NRI has never been a simple process — but recent changes to capital gains tax rules and TDS rates have made it even more financially significant. If you are an NRI with a flat, plot, or ancestral home in India that you are planning to sell, understanding these rules before signing any agreement can save you lakhs.
The biggest immediate shock for most NRIs is the TDS (Tax Deducted at Source) rate. When an NRI sells property, the buyer must deduct TDS at 20% for long-term capital gains (property held over 2 years) or 30% for short-term gains — and this is applied on the full sale price, not just the profit. On a ₹80 lakh property, that could mean ₹16–24 lakh withheld before you receive a single rupee. The good news: you can apply for a Lower Deduction Certificate from the Income Tax Department before the sale, which limits TDS to only your actual tax liability.
For long-term capital gains (LTCG), the tax rate stands at 12.5% without indexation under the latest rules, or 20% with indexation in some cases — your tax consultant can help you determine which route benefits you more depending on your purchase year and cost. The indexation benefit adjusts your purchase price for inflation, often dramatically reducing taxable profit on older properties.
Smart NRIs use Section 54 and Section 54EC exemptions aggressively. Reinvesting gains into a new residential property in India within 2 years, or into notified capital gains bonds (maximum ₹50 lakh) within 6 months, can eliminate your LTCG tax entirely. You can also use platforms like GoCredit to explore your financial options and understand how property transactions interact with your broader investment and loan profile.
Pro tip: Open an NRO or NRE account correctly and ensure your sale proceeds are repatriated through proper banking channels — repatriation of up to USD 1 million per year is allowed after paying applicable taxes and submitting Form 15CA/15CB through a chartered accountant.
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