This article gives an overview of the consequences Non-Resident Indians (NRIs) can suffer for selling their immovable premises in India.
Saloni Kumari | May 27, 2025 |
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.
What are capital gains?
They are gains earned while transferring capital assets. Property that is not movable is termed as a capital asset, and therefore, its sale is termed as capital gains.
Classification of Capital Gains: STCG vs. LTCG
When the property is inherited from someone, in that case it is important to consider the date when the original owner bought it, in order to classify the type of capital gain. The cost and holding period of the property will be based on when and how much the original owner bought it for. This makes it easier to calculate the capital gains correctly. This assists in proper classification and calculation that the taxes are paid an optimum value.
As per Indian tax laws, recent changes have made a big difference for NRIs selling property in India:
Can you save tax using Double Taxation Avoidance Agreements (DTAA)?
This is important because it affects how much money you actually receive from the sale.
TDS Rates Depending on Holding Period:
Buyer’s Responsibility:
Can the TDS Rate be Reduced?
When an NRI wants to send the money from the sale abroad, they need to:
These forms must be submitted to the authorised bank to transfer the money out of India.
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