NRI Selling Property in India: TDS, Capital Gains and Repatriation

An NRI selling property in India can sell residential or commercial property to a resident, an NRI or an OCI cardholder, but inherited agricultural land only to a person resident in India. The buyer must deduct tax at source on the payment, with no ₹50 lakh threshold, under section 393(2) of the Income-tax Act, 2025 (the old section 195). Long-term gains on property held over 24 months are taxed at 12.5% plus surcharge and cess. Sale money goes to your NRO account, and up to USD 1 million per financial year can be sent abroad after tax, using Forms 145 and 146 (the old 15CA and 15CB).

NRI selling property in India: who can buy and how they must pay

The foreign exchange rules (Foreign Exchange Management (Non-debt Instruments) Rules, 2019, read with the RBI’s directions) allow an NRI or OCI cardholder to transfer any immovable property to a person resident in India. Property other than agricultural land, plantation property or a farm house can also be transferred to another NRI or OCI. So Gurmeet in Canada, an NRI selling property in India, can sell her inherited farmland in Moga to a resident farmer, but not to her NRI cousin.

The price must come through banking channels into your own account, normally the NRO account. Never accept cash.

TDS on NRI property sale under the Income-tax Act, 2025

The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. For a resident seller, the buyer deducts 1% only where the price is ₹50 lakh or more. For a non-resident seller the rule is stricter:

• The buyer must deduct under section 393(2), Table Sl. No. 17 (the old section 195), on the sum chargeable to tax, at the rates in force, plus surcharge and health and education cess. There is no threshold.
• For a long-term gain the base rate is 12.5%. For a short-term gain it is the rate applicable to the NRI’s income, often much higher.
• If the seller does not give a valid PAN, a higher rate applies.
• Buyers unsure of the gain often deduct on the whole price, locking your money until a refund.

The fix: a lower or nil deduction certificate. Apply to the Assessing Officer under section 395 (old section 197) on Form 128 (old Form 13) before the sale, with a chartered accountant’s computation of the gain. With it, the buyer deducts only at the rate the certificate allows.

The 1 October 2026 change. Earlier, every buyer from an NRI needed a Tax Deduction Account Number (TAN). The Finance Act, 2026 amended section 397 so that, from 1 October 2026, a resident individual or HUF buyer can deposit this TDS through a PAN-based challan-cum-statement without a TAN. The duty to deduct remains. For an NRI selling property in India, this removes the main reason buyers hesitate.

Capital gains for NRI sellers

• Long term: land or building held for more than 24 months.
• Long-term rate: 12.5% without indexation, plus surcharge and cess. The option of 20% with indexation for land or buildings bought before 23 July 2024 was given to resident individuals and HUFs, so an NRI seller should assume 12.5% without indexation and confirm with a CA.
• Inherited property: the previous owner’s cost and holding period generally count, so most inherited property gives a long-term gain. Keep the old purchase papers.
• Exemptions: the reinvestment reliefs (the old section 54 for buying or building a residential house in India, capped at ₹10 crore, and the old section 54EC for specified bonds, up to ₹50 lakh within six months) continue in the 2025 Act under new numbers. Ask your CA for the current section.
• Tax treaty: a double taxation agreement may give credit abroad for Indian tax.

Repatriation of sale proceeds: the two routes

1. Property bought with foreign exchange. If you paid by inward remittance or from NRE or FCNR(B) accounts, the bank can allow repatriation of up to the amount originally paid in foreign exchange, for up to two residential properties.
2. The NRO route. Any balance, and proceeds of property bought from rupee funds or inherited, go to your NRO account. Under the RBI’s Master Direction on remittance of assets, you can remit up to USD 1 million per financial year (April to March) after tax. Larger amounts need RBI approval. Use one bank for instalments.

For each remittance, the remitter files Form 145 (which replaced Form 15CA from 1 April 2026), and where the remittance is taxable and above ₹5 lakh, a chartered accountant issues Form 146 (which replaced Form 15CB). Keep the sale deed, TDS certificate and original payment trail ready.

Step-by-step plan for an NRI selling property in India

1. Collect title deed, mutation, tax receipts, society no-dues and encumbrance certificate. See NRI legal checklist for property documents.
2. Get a CA’s capital gains computation and apply on Form 128 if a lower certificate helps.
3. Record the price, TDS and your NRO account in the agreement to sell.
4. Register the sale deed in person or through a narrow specific POA. See NRI power of attorney for property in India.
5. Collect the buyer’s TDS certificate, file your Indian return, claim any refund, then remit with Forms 145 and 146.

Frequently asked questions

How much TDS is deducted when an NRI sells property in India?

On a long-term gain, 12.5% plus surcharge and cess, under section 393(2) of the Income-tax Act, 2025. There is no ₹50 lakh threshold for NRI sellers. A lower deduction certificate under section 395 can reduce it to tax on the actual gain.

Does the buyer need a TAN to buy from an NRI?

Until 30 September 2026, yes. From 1 October 2026, a resident individual or HUF buyer can deposit the TDS through a PAN-based challan without a TAN. The duty to deduct is unchanged.

Can an NRI sell inherited agricultural land?

Yes, but only to a person resident in India. It cannot be sold to another NRI or OCI under the foreign exchange rules.

What replaced Form 15CA and 15CB?

From 1 April 2026, Form 145 replaced Form 15CA and Form 146 replaced Form 15CB under the new Income-tax Rules. They are used when remitting the sale money abroad.

Is an NRI selling property in India allowed to take all the money abroad?

Up to USD 1 million per financial year through the NRO route, after tax. Amounts originally paid in foreign exchange can also be repatriated for up to two residential properties.

Quick quiz

For the full sale and repatriation process, see the NRI Legal Matters certificate course.

Sources

• Income-tax Act, 2025: ss.393(2), 395, 397 (as amended by the Finance Act, 2026)
• Income-tax Rules, 2026: Forms 128, 145, 146
• Foreign Exchange Management (Non-debt Instruments) Rules, 2019
• RBI Master Directions on remittance of assets and on immovable property

This page is for education and general information, not legal advice for a specific case. Law as on 29 October 2026.