NRI Taxation and Remittance Rules for Selling Property in India

NRI Taxation and Remittance Rules for Selling Property in India

This article gives an overview of the compliances Non-Resident Indians (NRIs) must do to sell their immovable premises in India. It includes Tax payments and filing of various Forms and Returns.

Capital Gain

When any property is sold by an NRI in India, the profit earned on it is counted as either short-term or long-term capital gains, depending on the time period it is owned for. If in case it is held for over two years, it is treated as a part of long-term gain, and if it is owned for less than two years, then it is treated as a part of short-term gain. If in case the property is inherited from someone, then the ownership period will be counted from when it was originally bought, and additionally, that date of owing will be used to calculate the original cost.

Beginning from July 23, 2024, the tax rates on long term capital gains has decreased to 12.5%. Short term capital gains are usually higher as it taxed at the person’s regular income tax slab rate. From the financial year 2024–25, the benefit of indexation (adjusting the purchase price for inflation) is no longer available.

Tax treaties of India with foreign countries, known as Double Taxation Avoidance Agreements (DTAAs), usually do not provide much relaxation for capital gains from real estate sales in India.

Tax Deducted at source

One essential thing to remember is that Tax Deducted at Source (TDS) is a tax that buyers should deduct and pay to the government while purchasing any property. For NRIs, TDS is 12.5% (plus surcharge and cess) of the total sale value if it’s a long-term gain and Slab Rates for short-term gains. This can affect how much cash the seller actually receives at the time of sale.

If the actual tax owed is lower than the TDS amount, NRIs can apply for a lower TDS certificate from the Income Tax Department to reduce the amount deducted. Also, to send the sale money abroad (repatriate funds), the NRI must fill out and submit Form 15CA and Form 15CB through an authorised bank or dealer.

ITR Filing

Lastly, the NRI who has sold the property, must file the Income Tax Return for that Financial Year. For Financial Year 2024-25, the due date to file ITR is 31st July 2025.