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NRI property sale in India: complete guide to tax, TDS and repatriation

NRI Dash Research Team · Last reviewed: 2026-06-28

NRI property sale refers to the process by which a Non-Resident Indian sells residential or commercial property in India, triggering specific TDS, capital gains tax and repatriation obligations.

Buyer must deduct TDS at 12.5% before handing over the property

When an NRI sells Indian property: the buyer deducts TDS at 12.5% on the full sale consideration (not just the gain) and deposits it before registration. The NRI's net gain is taxable at 12.5% LTCG (property held 24+ months). Gains can be exempted by investing in 54EC bonds within 6 months or in a new residential property under Section 54F. Net proceeds go to NRO and can be repatriated after tax compliance.

Key points

Step-by-step: NRI property sale process

Step 1: Calculate LTCG — Sale consideration minus cost of acquisition (or indexed cost if acquired before April 1, 2001 using FMV as cost) minus improvement costs. For post-July 23, 2024 sales, indexation is not available.

Step 2: Assess exemption options — If reinvesting gains in 54EC bonds (within 6 months, up to ₹50 lakh) or the full sale consideration in a new home under 54F (within 2 years/3 years for construction), plan before executing the sale.

Step 3: Buyer deducts TDS at 12.5% on the full sale consideration and deposits it to the government (Form 26QB) before the sale is registered. Buyer needs TAN for this.

Step 4: Ensure Form 26AS reflects the TDS credit after registration.

Step 5: Sale proceeds (net of TDS) are credited to NRO account.

Step 6: File ITR-2 in the year of sale. Report LTCG in Schedule CG. Claim TDS credit and any exemptions (54EC or 54F).

Step 7: Apply for lower TDS certificate via Form 13 in advance if the actual LTCG tax is lower than 12.5% of the sale consideration (e.g. gain is much less than sale value).

Step 8: Repatriate proceeds from NRO within USD 1 million per year — submit Form 15CA/15CB to the bank.

Budget 2024 change: no indexation from FY 2024-25

Before July 23, 2024: LTCG tax was 20% with indexation. For long-held properties (15–20+ years), indexed cost was much higher, reducing the taxable gain significantly.

From July 23, 2024: LTCG is 12.5% without indexation. The effective tax may be higher for long-held properties despite the lower rate.

Grandfathering: for properties acquired before FMV-as-of-2001 date, the FMV as of April 1, 2001 is used as the cost base (no indexation from that date for new regime).

Practical advice: for properties bought in the 2000s or earlier, model both scenarios and discuss with a CA before the sale.

Frequently asked questions

Can a lower TDS certificate reduce the 12.5% buyer TDS?

Yes. Apply via Form 13 on the Income Tax portal before the sale. If approved, the AO issues a certificate specifying a lower TDS rate (e.g. 5% or nil). Provide this to the buyer so they deduct at the lower rate.

What if the buyer does not deduct TDS?

The default for TDS non-deduction lies with the buyer. The NRI may still owe LTCG tax, which can be paid directly. Interest and penalties apply for TDS default on the buyer side.

Is there a capital gains account if I cannot invest in 54EC or 54F before ITR deadline?

Yes. Deposit the unutilised exemption amount in a Capital Gains Account Scheme (CGAS) at a bank before the ITR filing deadline. You have up to 3 years (for 54F) to invest from CGAS, though 54EC bonds have a strict 6-month post-sale window.

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