NRI Selling Property in India — Complete Tax Guide 2026

Selling property in India as an NRI? A Lower TDS Certificate can stop the buyer deducting tax on your full sale value instead of just the gain. Get CA help now →

NRI Selling Property in India — Complete Tax Guide 2026

Selling property in India as an NRI involves two tax systems, mandatory TDS on the entire sale value, strict FEMA repatriation rules, and a bank that won’t process your transfer without CA-certified documents. This guide covers the complete process for FY 2025-26.

The Biggest Problem — TDS on Full Sale Value, Not Just the Gain

Under Section 393(2) of the Income Tax Act, 2025 (earlier Section 195), the buyer deducts TDS on the entire sale consideration — not just the profit. On a ₹1 crore property with actual gain of ₹35 lakh, TDS deducted is ₹12.5 lakh+ while actual tax is ₹4.4 lakh. The ₹8+ lakh difference sits with the Income Tax Department for 12-18 months.

The Solution — Lower TDS Certificate (Section 395(1))

Apply via Form 128 on the Income Tax portal at least 8-10 weeks before the sale. The Assessing Officer then specifies a TDS rate matching your actual liability. This is the single most important step for any NRI property sale above ₹50 lakh.

How the Buyer Deducts and Files This TDS

The buyer deducts TDS under Section 393(2) of the Income Tax Act, 2025 (earlier Section 195) and must have a TAN to do so. Because the seller is an NRI, this deduction is filed on Form 144 (formerly Form 27Q) — not Form 26QB, which applies only when the seller is a resident Indian. Once filed, the buyer issues Form 131 (formerly Form 16A) to the NRI seller as proof of the deduction.

Confirming NRI Status Before the Sale

You are treated as an NRI under the Income Tax Act if you spent fewer than 182 days in India during the relevant financial year. This status decides the TDS rate the buyer applies and your eligibility for DTAA relief and repatriation — worth confirming before the sale, not after.

How Capital Gains Are Actually Computed

For property held more than 24 months, long-term capital gains are computed after applying the Cost Inflation Index (CII) to your original purchase price — this indexed cost is deducted from the sale price to arrive at the taxable gain, and for older properties it can reduce the taxable gain by 40-60%. Property held 24 months or less is taxed at slab rates with no indexation benefit.

Capital Gains Exemptions Available to NRIs

Warning: Section 54EC’s 6-month window runs from sale date, not refund date. Invest in bonds first, file ITR later.

Repatriation — Form 145 and Form 146 (Replaces 15CA/15CB)

From April 1, 2026, Form 15CA is replaced by Form 145 and Form 15CB by Form 146. Submit these to your bank to transfer sale proceeds abroad. Repatriation limit: USD 1 million per financial year.

If you are repatriating to the UK, UAE, or USA or Canada, see our country-specific Form 145/146 DTAA guide for the exact documentation your bank will expect.

5 Most Expensive Mistakes

1. Not applying Form 13 in time — ₹8-15 lakh stuck for 18 months.
2. Missing 54EC 6-month bond deadline — full tax applies.
3. Not filing ITR — TDS refund permanently lost.
4. Using old Form 15CA/15CB after April 2026 — bank rejects transfer.
5. No improvement cost receipts — legitimate deductions lost.

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Use our NRI property sale tax calculator to compute capital gains, TDS and net repatriation. For Lower TDS Certificate or Form 15CA/15CB filing, contact our NRI tax team.