TDS. Capital Gains. Form 13. Repatriation. Power of Attorney. This guide covers the entire process — updated for 2026 — so you know exactly what to expect, what to plan for, and what mistakes to avoid.
Yes — an NRI can freely sell property in India. However, the rules differ depending on the type of property and how it was acquired. This is governed primarily by the Foreign Exchange Management Act (FEMA) and the Income Tax Act.
Under FEMA, an NRI may sell any immovable property in India — including residential and commercial property — without prior approval from the Reserve Bank of India (RBI), provided the property was acquired in accordance with FEMA regulations when it was purchased.
The buyer can be a resident Indian, another NRI, or an OCI card holder.
For the purposes of property sales in India, you are classified as an NRI if:
Note that residential status for tax purposes (under the Income Tax Act) is determined differently from FEMA status. Both matter — and both affect your obligations as a seller. Getting this wrong at the outset can affect your TDS rate, repatriation rights, and capital gains exemptions. We cover this in Chapter 11 — and if you're unsure which category you fall into, your first call with us will resolve it in 15 minutes.
Here is the full end-to-end process, from planning to money in your overseas account.
Before anything else — confirm whether you're an NRI, RNOR, or Resident under both Income Tax Act and FEMA. This determines your TDS rate, capital gains treatment, and repatriation rights.
Sale deed, title documents, encumbrance certificate, property tax receipts, Khata, building plan approvals, and original purchase documents. Missing documents can delay or derail a sale.
This is the most important step — and it must happen before the sale is finalised. The calculation involves purchase price, improvement costs, indexation choices, exemption eligibility, and residential status. Errors here directly increase your tax liability. If TDS will be significant, apply immediately for a Lower Deduction Certificate (Form 13). This takes 4–8 weeks — and every week you wait is a week closer to registration day with no certificate in hand. We handle this for you — start here.
If you cannot be physically present for the sale, execute a Power of Attorney at the Indian Consulate or Embassy in your country. This allows a designated person in India to sign documents on your behalf.
The sale agreement (also called Agreement to Sell) is signed between buyer and seller, typically with a token advance of 10%. Review every clause — especially the TDS clauses, since buyers sometimes try to short-deduct TDS on NRI sales.
At the time of registration, the buyer deducts TDS from the sale amount (12.5% for long-term gains, or as per the Form 13 certificate if obtained). The buyer deposits this with the IT Department and provides you with a TDS certificate.
The sale deed is registered at the Sub-Registrar's office. Stamp duty and registration charges are paid. The property officially transfers to the buyer.
After registration, the buyer pays the balance amount to your NRO (Non-Resident Ordinary) account in India. The funds must first come into an Indian account before being remitted abroad.
File your ITR in India for the year in which the sale took place, reporting the capital gains. If excess TDS was deducted, claim the refund through your ITR.
Obtain 15CA/15CB certification from a Chartered Accountant. Submit the remittance application and FEMA declaration to your bank. Funds are transferred to your overseas account.
This is the single most important thing to understand before you sell. TDS (Tax Deducted at Source) on NRI property sales works very differently from TDS on resident Indian property sales — and most NRIs discover this only when the buyer presents them with the number.
For a resident Indian selling property, TDS is 1% of the sale consideration — a minor amount. For an NRI, TDS is calculated on the full sale consideration, not just the profit.
Depending on your total income, an additional surcharge may apply on top of the 12.5% — bringing the effective rate to 15% or higher. Cess of 4% is added on top. The surcharge calculation depends on your total global income, which most NRIs don't factor in. Getting this number wrong means either over-paying tax or facing a demand notice later. We calculate this for you before you agree on a sale price.
| Property Type | Holding Period | Classification |
|---|---|---|
| Immovable property (house, flat, plot) | More than 24 months | Long-Term Capital Gain (LTCG) |
| Immovable property (house, flat, plot) | 24 months or less | Short-Term Capital Gain (STCG) |
Note: The holding period is counted from the date of acquisition (or allotment letter for under-construction property). For inherited property, the deceased's holding period is included. For gifted property, the original giftor's acquisition date and cost applies. These nuances affect whether you pay 12.5% or 30% — and the difference on a ₹1 crore property can be ₹17.5 lakhs. Get your holding period and gain calculated correctly — schedule a 1:1.
Form 13 is an application to the Income Tax Department requesting a certificate for Lower or Nil TDS deduction. It is the single most powerful tool available to an NRI seller — and it must be applied for before the sale is registered. The application requires precise documentation: capital gains calculations, income projections, property details, and a clear basis for why a lower rate is justified. A poorly prepared application gets rejected or returns a higher-than-expected rate. We prepare and file Form 13 on your behalf — with a track record of successful approvals.
Without Form 13, the buyer must deduct TDS at the full statutory rate (12.5% or 30%). With a valid Form 13 certificate, the buyer can deduct TDS at a significantly lower rate — sometimes nil — based on your actual tax liability rather than the statutory presumption.
Use your PAN credentials. If you don't have an account, register first.
Go to e-File → Income Tax Forms → File Income Tax Forms → Form 13.
Sale agreement, purchase documents, capital gains calculation, income details, PAN card, passport copy, and bank details.
The application is assessed by the Assessing Officer. Typically takes 4–8 weeks. You will receive a certificate specifying the applicable TDS rate.
Once received, hand the certificate to your buyer. They are then legally obligated to deduct TDS at the rate specified in the certificate — not the statutory rate.
Form 13 processing takes 4–8 weeks under normal circumstances — and can take longer if the IT Department raises queries on your application. We've seen delays of 3–4 months when applications are filed incorrectly or without proper supporting documentation. Apply the moment you have a confirmed buyer. Contact us immediately — we file within days of your first call.
Capital Gains Tax is the tax on the profit you make from selling property. The calculation and the applicable rate depend on how long you held the property.
If you held the property for more than 24 months, the gains are classified as Long-Term. As of the Finance Act 2024 (applicable from FY 2025–26 onwards):
| Item | Amount |
|---|---|
| Sale Consideration | ₹1,50,00,000 |
| Less: Cost of Acquisition | ₹60,00,000 |
| Less: Cost of Improvement | ₹10,00,000 |
| Less: Cost of Transfer (brokerage, legal fees) | ₹3,00,000 |
| Long-Term Capital Gain | ₹77,00,000 |
| Tax @ 12.5% | ₹9,62,500 |
If you held the property for 24 months or less, gains are Short-Term and taxed at your applicable income tax slab rate — which for most NRIs will be 30% (plus surcharge and cess). STCG situations require careful planning to minimise tax outflow.
If you qualify, capital gains exemptions can reduce your tax liability to near zero. NRIs are eligible for the same exemptions as resident Indians under the Income Tax Act — but the conditions are strict, the timelines are unforgiving, and the documentation requirements are specific. Missing the 6-month window for Section 54EC or failing to deposit in the Capital Gains Account Scheme (CGAS) on time means losing the exemption entirely — with no recourse. We advise on which exemption applies to your situation and ensure you don't miss the window.
Condition: You sell a residential property that was held for more than 24 months (LTCG). You reinvest the capital gains (not the full sale value) in one residential house property in India.
Condition: You sell any long-term capital asset other than a residential house (e.g., commercial property, plot, or shares). You invest the entire net sale consideration (not just the gain) in one residential house property in India.
Condition: You invest the long-term capital gains in specified bonds issued by NHAI (National Highways Authority of India) or REC (Rural Electrification Corporation) within 6 months of the sale.
| Section | Asset Sold | Investment | Max Exemption | Timeline |
|---|---|---|---|---|
| 54 | Residential house | Residential house in India | ₹10 crore | 2 years / 3 years construction |
| 54F | Any long-term asset | Residential house in India | ₹10 crore | 2 years / 3 years construction |
| 54EC | Any long-term asset | NHAI / REC bonds | ₹50 lakhs | 6 months from sale |
Once the property is sold and taxes are paid, the money sits in your NRO account in India. Moving it to your overseas account — repatriation — involves a defined RBI process that must be followed correctly. Banks frequently return incomplete documentation. The 15CB certificate requires a CA who understands both the Income Tax and FEMA implications. And a single error in Form 15CA can delay the remittance by weeks. We manage the entire repatriation process — documentation, CA coordination, and bank liaison.
The IT Department must be satisfied. Either TDS has been deducted and a Form 13 certificate is in place, or the ITR has been filed and tax cleared.
A Chartered Accountant reviews all documents, verifies tax compliance, and issues Form 15CB. This cannot be skipped — the bank will not process the remittance without it.
File on the Income Tax portal. Some cases require 15CA-CB together; others only need 15CA. The CA will advise on which applies.
Submit all documents to your bank's NRI desk. The bank verifies and processes the outward remittance to your overseas account.
Sale proceeds from Indian property must first come into your NRO account — not NRE. This is one of the most common FEMA violations NRIs commit unknowingly. NRO accounts hold funds from Indian sources (rent, sale proceeds, dividends). NRE accounts hold foreign earnings and are fully repatriable but are not the right destination for Indian property sale proceeds.
After repatriation taxes are cleared, funds can be transferred from NRO to NRE — and from NRE, repatriation abroad is straightforward.
One of the most common concerns NRIs have: "Do I need to come to India to sell?" The answer, in most cases, is no. A properly executed Power of Attorney (POA) allows someone in India to complete the entire sale on your behalf. The emphasis here is on properly executed — a POA that is incorrectly drafted, improperly notarised, or missing required clauses will be rejected at registration, forcing a repeat of the entire process from abroad. We guide you through POA execution specific to your state and property type.
A Power of Attorney is a legal document that authorises a named person (the attorney holder) to act on your behalf for specific purposes — in this case, signing sale documents and completing property registration.
The POA must be drafted correctly — specifying the property, the exact powers granted, and the duration. A lawyer in India typically prepares this.
You must sign the POA either before the Indian Consulate/High Commission in your country, or before a local Notary Public (depending on state rules).
If signed before a local notary, the document may require apostille (for Hague Convention countries) or legalisation through the Indian Embassy.
The physical original POA must be sent to your attorney holder in India. Scanned copies cannot be used for property registration.
Depending on the state, the POA may need to be registered at the Sub-Registrar's office in India before it can be used for property registration. Your attorney holder handles this.
Residential status is one of the most misunderstood aspects of NRI taxation. There are actually three categories — and which one you fall into significantly affects your tax liability.
| Status | Days in India (Current Year) | Capital Gains Treatment |
|---|---|---|
| Resident and Ordinarily Resident (ROR) | 182+ days | Global income taxable in India |
| Resident but Not Ordinarily Resident (RNOR) | 60–182 days (with conditions) | Indian income taxable; foreign income partially exempt |
| Non-Resident Indian (NRI) | Less than 182 days | Only Indian income taxable; specific TDS rates apply |
If you are planning to return to India permanently and sell your property either just before or just after returning, timing matters enormously. If you sell while still classified as an NRI, the standard NRI tax rules apply. If you sell as an RNOR or Resident, different rules — and potentially different rates — apply.
This transition is called Returning NRI Tax Planning and is one of the most specialised — and most valuable — areas of NRI taxation. The window during which you are RNOR (typically 2–3 years after return) can be used to sell property at significantly lower effective tax rates. Miss it, and you pay full resident rates on global income. If you're planning to return to India, schedule a 1:1 with us at least 12 months before your return.
Every one of these mistakes is avoidable — but only if you know what's coming. This is why NRIs who work with us never face these situations. Schedule a 1:1 before you agree on a sale price — not after.
The most common and most expensive mistake. Many NRIs don't know Form 13 exists — and by the time they do, the sale has already been registered and the full TDS withheld. The money is then stuck in a refund cycle for 12–18 months, during which it earns no return. On a ₹2 crore sale, that's potentially ₹25 lakhs tied up. We make sure this never happens — Form 13 is the first thing we handle when you come to us.
Some buyers pressure NRI sellers to show a lower consideration in the sale agreement (the old "black money" practice). This creates legal and tax complications on both sides and can result in IT scrutiny. Always insist on the correct sale consideration.
Sale proceeds from Indian property must first land in the NRO account, not NRE. Directing funds directly to NRE or overseas accounts violates FEMA and can create significant compliance issues.
Even if full TDS has been deducted, an ITR must be filed in India for the year of sale. Skipping this means foregoing any TDS refund — and creates a gap in your India tax record that can cause problems later.
NRIs often assume the process can be completed in 4–6 weeks. Realistically, from Form 13 application to money in your overseas account, the total timeline is 4–6 months. Planning with this in mind prevents stress and rushed decisions.
A generic or incorrectly drafted POA can be refused by the Sub-Registrar or the buyer's bank. Have it drafted by a lawyer familiar with the specific state's registration requirements.
Many NRIs pay full capital gains tax without exploring Sections 54, 54F, or 54EC — which can significantly reduce or eliminate the tax. The 6-month deadline for 54EC bonds is especially often missed.
The buyer is legally responsible for deducting TDS correctly. But errors happen — wrong PAN, wrong rate, short deduction. Always verify the TDS deposit on Form 26AS before the registration date.
From Form 13 to repatriation, we handle the entire process for NRIs — end to end. Schedule a free consultation and we'll map out your specific situation in 30 minutes.
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