NRI Tax on Indian Property
Calculate TDS u/s 195, LTCG / STCG, and your country's DTAA relief before you sign the sale deed. Built around the post-July 2024 budget rules — no indexation, flat 12.5%.
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NRI sale-side tax planning has 5 moving parts: lower-TDS certificate (Sec 197), Section 54 / 54F / 54EC reinvestment, DTAA documentation, Form 15CA / 15CB repatriation, and home-country tax filing. Get all 5 stitched together by a senior Brickplot analyst — Verified Documents bundle + 30-min expert call + written summary, ₹4,999.
Book a Verified Documents callThe 5 things every NRI seller misses
- TDS is on sale value, not gain. A ₹3 Cr sale with ₹40 L gain triggers ₹37.5 L TDS (12.5% × 3 Cr), even though actual tax is only ₹5 L. File for the lower-TDS certificate u/s 197 BEFORE the sale closes.
- Indexation is gone (post-July 2024). Old assumption (“LTCG ≈ 8–10% effective after indexation”) no longer holds. New rate is a flat 12.5% on actual gain, no inflation adjustment.
- Section 54 reinvestment can drop LTCG to zero. Reinvest entire gain in another residential property within 1 year before or 2 years after sale (3 years if under construction). Hold the new property for 3 years to keep the exemption.
- DTAA credit goes to home country, not India. India tax is paid in full; your home country tax filing claims the Foreign Tax Credit. USA Form 1116, UK CGT return, Canada T2209.
- Repatriation cap = USD 1 million / year. If sale exceeds USD 1 million in INR equivalent, plan repatriation across two financial years or seek RBI approval. Use Form 15CA + 15CB for each transfer.
Frequently asked questions
What is the TDS rate when an NRI sells property in India?
Under Section 195 of the Income Tax Act, the buyer must deduct TDS at 12.5% (LTCG, holding > 2 years) or 30% + surcharge + cess (STCG, holding ≤ 2 years) on the entire sale value — not just the gain. NRIs can apply for a lower-TDS certificate u/s 197 if the actual tax liability is lower.
How does the July 2024 budget change NRI property tax?
Finance Act 2024 abolished indexation for property and reset the LTCG rate to a flat 12.5% (was 20% with indexation). Properties acquired before July 23, 2024 retain a grandfather option: pay 12.5% without indexation OR 20% with indexation, whichever is lower. Sales after that date are 12.5% flat.
How does the DTAA reduce double taxation?
India retains primary right to tax property gains. The DTAA between India and your country of residence specifies whether home-country tax is reduced (treaty rate cap) or credited (foreign tax credit). USA, UK, Canada, Australia allow Foreign Tax Credit against home-country liability. UAE and Singapore impose no domestic CGT, so India tax is the only tax.
Can NRIs claim Section 54 exemption to avoid LTCG?
Yes. Section 54 (residential property), 54F (other long-term assets), and 54EC (NHAI / REC bonds up to ₹50L) all available to NRIs. Reinvest the capital gain (Section 54/54F) or up to ₹50L (Section 54EC) within the prescribed window to defer or eliminate LTCG. Bond lock-in: 5 years for Section 54EC.
What is repatriation limit for NRI property-sale proceeds?
Up to USD 1 million per financial year per NRI from NRO account (RBI Master Direction on Liberalised Remittance Scheme). Beyond USD 1 million requires RBI approval. Use Form 15CA + 15CB (CA certificate) for every repatriation.
Can NRIs avoid TDS by under-declaring the sale price?
No. Sub-registrar applies stamp duty on the higher of agreement value or circle rate. The shortfall becomes deemed gift income for the buyer under Section 56(2)(x) and triggers a separate tax notice. Also exposes both parties to a benami-property investigation. Never under-declare.