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

You inherited a flat in Hyderabad, or you bought a plot in Vijayawada a decade ago, and now you live in Dallas. You want to sell. The buyer is ready. Then your CA mentions that the buyer has to deduct tax at over 14% of the entire sale price, not the gain, and the whole deal stalls.

That moment catches almost every first-time NRI seller off guard. The rules that apply to you are not the rules a resident seller deals with. This is the walkthrough we give clients who own residential property or land in India and want to sell it remotely, in the order the deal actually unfolds.

You decide to sell: what changes because you are an NRI

A non-resident seller triggers a completely different tax-deduction machinery than a resident seller. For a resident, the buyer deducts a flat 1% of the sale price under Section 194-IA. For you, that section does not apply at all.

Instead the buyer must deduct tax under Section 195 of the Income Tax Act. Section 195 is the provision that governs tax deducted at source on any sum paid to a non-resident that is chargeable to tax in India. The deduction is on the income embedded in the payment, and the practical reality is harsher than most people expect.

We have walked sellers in the Dallas to Hyderabad corridor through this conversation many times. The first reaction is almost always the same: "Why is the buyer holding back so much of my money?" The answer sits in the next section.

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

The buyer deducts TDS at the long-term capital gains rate of 12.5%, plus surcharge and 4% cess, which works out to roughly 14.95% in the common case. Critically, unless you get a certificate first, the buyer deducts this on the full sale consideration, not on your actual gain.

That distinction is the single biggest cash-flow shock in NRI property sales. Picture a sale of Rs. 1 crore where your real long-term gain is only Rs. 30 lakh. Without a certificate, the buyer can be forced to deduct on the entire Rs. 1 crore, locking up close to Rs. 15 lakh with the tax department until you file a return and claim a refund the following year.

Here is the resident-versus-NRI contrast that surprises buyers and sellers alike.

The surcharge climbs with the sale value, so on high-value deals the effective rate runs higher than 14.95%. We tell clients to assume the worst case while planning, then bring it down with a certificate.

Long-term or short-term: the 24-month rule

Whether your gain is long-term or short-term depends on how long you held the property. For immovable property, holding for more than 24 months makes the gain long-term; 24 months or less makes it short-term.

This holding period matters because the two are taxed very differently. Short-term gains are added to your income and taxed at slab rates, which can be steep. Long-term gains get the concessional regime.

The Union Budget of 23 July 2024 reset that regime. The long-term capital gains rate on property dropped from 20% to 12.5%, but indexation was removed for transfers on or after that date. Indexation is the adjustment that inflated your purchase cost to today's value before computing the gain, and losing it can raise the taxable gain even though the headline rate fell.

There is a catch that lands squarely on NRIs. The Budget left resident individuals and HUFs a choice between the old 20%-with-indexation method and the new 12.5%-without-indexation method for property bought before 23 July 2024. NRIs do not get that choice. You pay the flat 12.5% without indexation regardless of when you bought.

So an NRI who bought a flat in 2010 cannot use indexation to soften a long-held gain the way a resident neighbour can. We have seen this single rule swing a tax bill by several lakh on older properties.

Form 13: the lower TDS certificate that protects your cash

The fix for over-deduction is the lower or nil TDS certificate. You apply under Section 195(2) using Form 13 to your jurisdictional Assessing Officer, asking the department to certify TDS on your actual gain instead of the full sale price.

A lower deduction certificate is an order from the AO directing the buyer to deduct tax at a reduced rate, or nil, specified in the certificate. Once issued, the buyer deducts only what the certificate says, so your money is not parked with the department for a year.

The application is filed online through TRACES. You submit the computation of your expected capital gain, purchase and sale documents, and proof of any reinvestment you plan to claim. The officer reviews and issues a certificate with a specific rate tied to that specific buyer and transaction.

Timeline is the part sellers underestimate. In the cases we have handled, Form 13 processing runs anywhere from a few weeks to a couple of months, depending on the AO's workload and how complete your file is. Start it before you finalise the deal, not after the sale deed is drafted, or you will have already lost the cash to TDS.

The buyer's obligations: TAN and Form 27Q

Your buyer carries real compliance weight, and many resident buyers do not know it. The first thing the buyer needs is a TAN, the Tax Deduction and Collection Account Number, because Section 195 deductions cannot be deposited without one.

After deducting, the buyer deposits the TDS and files Form 27Q, the quarterly return for tax deducted on payments to non-residents. The buyer then issues you Form 16A as the certificate of deduction, which you use when claiming credit in your Indian return.

This is why some buyers hesitate to purchase from an NRI. They hear "TAN," "Section 195," and "Form 27Q" and worry about getting the deduction wrong and facing a penalty. A seller who shows up with a clean title and a lower-TDS certificate in hand removes most of that friction, which is exactly why getting your paperwork straight speeds the sale.

Selling from abroad: the power of attorney

Most NRIs cannot fly to India to sign the sale deed, so they sell through a power of attorney. A power of attorney is a legal instrument by which you authorise a trusted person in India to act on your behalf for specified acts, here the sale and registration of your property.

Two practical rules govern a PoA executed abroad. First, it must be properly attested where you sign it: either notarised and apostilled if you are in a country party to the Hague Apostille Convention, which the United States is, or attested at the Indian consulate. Second, once it reaches India it must be presented to the sub-registrar and adjudicated, with stamp duty paid, within the window your state allows.

Under the Registration Act 1908, the sale deed itself has to be registered, and the registrar will scrutinise the PoA holder's authority closely. A poorly drafted or improperly attested PoA is one of the most common reasons NRI registrations get rejected at the counter.

Choose the holder carefully and keep the PoA narrow. We have reviewed deals from the Dallas to Hyderabad corridor where a vaguely worded general PoA gave the holder far more power than the owner intended, and untangling it cost more than the sale was worth. A specific PoA limited to this one sale is safer. Our guide to PoA pitfalls for NRIs and the GPA versus SPA breakdown go deeper on getting this right.

Section 54 and 54EC: legitimate ways to cut the gain

You can reduce or eliminate the capital gains tax by reinvesting, and this also strengthens your Form 13 application. Section 54 exempts long-term gains on a residential property if you reinvest the gain in another residential property in India within the prescribed window, one year before or two years after the sale, or three years for construction.

Section 54EC offers a different route. It exempts the gain if you invest it in specified bonds, such as those issued by REC or NHAI, within six months of the sale, subject to an investment cap of Rs. 50 lakh in those bonds. The bonds carry a lock-in, so the money is tied up, but the exemption is real.

Section 54F covers the case where you sold a non-residential asset, like land, and reinvest the whole net consideration in a house. The conditions are stricter, so check eligibility before relying on it. Plan reinvestment before you sell, because the exemption affects the gain figure you put on your Form 13 application, which in turn lowers the TDS the buyer holds back.

How does an NRI repatriate property sale proceeds to the US?

You route the money through your NRO account, then remit abroad using Form 15CA and Form 15CB, within the annual limit the RBI sets. Sale proceeds of Indian property credit to an NRO account first; they cannot be sent straight overseas from the sale.

The RBI permits an NRI to repatriate up to USD 1 million per financial year from the NRO account without RBI approval. That cap is per person per year and pools everything leaving the NRO account, so property proceeds, rent, interest, and dividends all count against the same USD 1 million.

There is a separate, more generous path. If you bought the property using funds from your NRE or FCNR account, repatriation of the sale proceeds of up to two residential properties is allowed outside the USD 1 million cap, subject to the conditions in the RBI's FEMA framework. For most inherited or rupee-funded properties, though, the USD 1 million annual route is what applies.

Form 15CA is the remitter's online declaration to the Income Tax Department that tax on the remittance has been handled. Form 15CB is a chartered accountant's certificate confirming the nature of the remittance and that the correct tax was paid. Your bank will not release the foreign remittance until both are submitted, so budget time for your CA to prepare them.

In our experience with the Dallas to Hyderabad corridor, the repatriation step is rarely where deals break; it is the TDS surprise at the start that does. Sellers who plan the USD 1 million limit and the 15CA/15CB filing upfront move their money out without drama.

Why clean title before listing makes the whole deal faster

Buyers, and more importantly their banks, will not close on a property with a cloudy title. When a buyer takes a home loan, the lender's legal team runs its own title scrutiny, and any encumbrance, missing link document, or pending litigation can sink the loan and the sale.

For an NRI selling remotely, a title defect surfacing mid-deal is worse than for a resident, because you cannot easily run to the sub-registrar's office to chase the missing document. The fix is to verify the title before you list, not after a buyer's bank flags it.

This is where a fast legal opinion earns its keep. LegiScore produces a full legal opinion in under 15 minutes by searching across 18,000-plus courts for litigation and encumbrances, for Rs. 1,999 per report; the NRI-focused check runs about $24 against the roughly $2,400 it costs to fly a lawyer to inspect records in person. Going in with a clean opinion in hand means the buyer's bank has less to question, and the deal moves. For the mechanics of verifying title from abroad, see our remote due diligence guide and why buyers insist on title verification.

The sequence, start to finish

Put together, the NRI sale runs in this order. Verify your title and resolve any defect before listing. Estimate your capital gain and decide on Section 54 or 54EC reinvestment. File Form 13 for a lower TDS certificate early. Execute and attest your PoA abroad and send it to India. Let the buyer deduct TDS at the certificate rate, deposit it, and file Form 27Q. Then repatriate through your NRO account with Form 15CA and 15CB inside the USD 1 million limit.

Get the first and third steps moving in parallel and the rest falls into place. Skip them and you lose months and a chunk of cash to refundable-but-stuck TDS.

Frequently asked questions

Does the buyer really deduct TDS on the full sale price, not just my profit?

Yes, unless you obtain a lower TDS certificate first. Under Section 195 the default is deduction on the full consideration at roughly 14.95% for long-term gains. A Form 13 certificate from your Assessing Officer is the only way to get the buyer to deduct on your actual gain instead.

Can I sell my Indian property without coming to India?

Yes, through a registered power of attorney executed abroad. You sign it before a notary and have it apostilled, or get it attested at the Indian consulate, then send it to your trusted holder in India for adjudication and registration. The sale deed is then registered under the Registration Act 1908 by your PoA holder.

How much money can I send to the US after selling?

Up to USD 1 million per financial year from your NRO account without RBI approval, covering all your outward remittances combined. If you originally bought the property with NRE or FCNR funds, proceeds of up to two residential properties can be repatriated outside that cap. Both routes need Form 15CA and a CA's Form 15CB.

Do NRIs still get indexation benefit after the July 2024 changes?

No. NRIs pay long-term capital gains at a flat 12.5% without indexation for transfers on or after 23 July 2024. The option to choose the old 20%-with-indexation method was given only to resident individuals and HUFs, not to NRIs.

How long does the lower TDS certificate take?

Plan for a few weeks to a couple of months from filing Form 13 on TRACES. The timeline depends on your Assessing Officer and how complete your documentation is. File it before you finalise the buyer, not after, so your cash is not deducted at the full rate in the meantime.

Your next step

If you are early in the process, do two things this week before anything else. Pull your title documents and get the title verified so a buyer's bank cannot derail the sale later, and ask a CA to estimate your capital gain so you know whether a Form 13 lower TDS certificate is worth filing. Those two moves set the tone for the entire transaction.

Everything after that, the PoA, the buyer's Form 27Q, the repatriation paperwork, follows a known path. The sellers who lose money are the ones who discover the Section 195 deduction on the day of signing instead of planning for it months ahead.

Related reading

• NRI property buying in India: the complete guide
• FEMA regulations for NRI property purchases in India
• NRI power of attorney pitfalls for property in India
• NRI property due diligence: remote verification
• NRI property fraud patterns and red flags
• Property title verification in India: why buyers need it
• Power of attorney for property: GPA vs SPA