NRI Selling Property in India:
Tax, TDS & Repatriation Guide
Complete compliance framework for NRI sellers and Indian resident buyers — covering TDS deduction, capital gains computation, exemption planning and FEMA repatriation under the Income Tax Act 2025 and Income Tax Rules 2026.
Table of Contents
- Overview & Key Players
- NRI / Non-Resident Status Determination
- TDS Obligations of Indian Buyer
- Capital Gains for NRI Seller
- LTCG vs STCG Rates
- Exemption Planning: Sections 54, 54EC, 54F
- Lower / Nil TDS Certificate (Section 197)
- Compliance Checklist: Buyer & Seller
- FEMA & Repatriation of Sale Proceeds
- Numerical Illustration
- Frequently Asked Questions
01 Overview & Key Players
When a Non-Resident Indian (NRI) sells immovable property in India to an Indian resident buyer, two distinct sets of income-tax obligations are triggered simultaneously — one for each party. This dual-layer compliance is one of the most complex areas in Indian personal taxation and is governed by the following framework for Tax Year 2026-27. For our full suite of NRI Taxation Services, see our dedicated page.
| Party | Primary Obligation | Key Provision |
|---|---|---|
| Indian Resident Buyer | Deduct TDS on entire sale consideration at prescribed rate before paying NRI seller; file Form 144 (TDS return for non-resident payments); deposit via Challan 280/281 on IT Portal | Section 393(2), IT Act 2025 — TDS on payments to non-residents. TRACES Payment Code: 1041 (LTCG on property), 1042 (STCG on property). TDS return: Form 144, IT Rules 2026. [Earlier: Section 195, IT Act 1961 / Form 27Q, IT Rules 1962] |
| NRI Seller | Compute capital gains under Section 57 / Section 58, claim exemptions under Sections 54/54EC/54F, file ITR, obtain Form 42 (TRC) / Form 145 & Form 146 for repatriation | Sections 57, 58, 67, 68, 69, IT Act 2025 (capital gains charge, computation, exemptions). Repatriation: Form 145 (replaces 15CA) + Form 146 (replaces 15CB). DTAA: Form 41 (replaces Form 10F). [Earlier: Sections 45, 48, 54, 54EC, 54F, 112, 112A / Forms 15CA, 15CB, 10F, IT Act 1961] |
02 NRI / Non-Resident Status Determination
The tax treatment in this guide applies only when the seller qualifies as a Non-Resident under Section 6, Income Tax Act 2025 for the Tax Year in which the sale occurs. Residential status is determined independently for each Tax Year. [Earlier: Section 6, IT Act 1961 — re-enacted verbatim in ITA 2025; only terminology changed from “Previous Year” to “Tax Year”]
| Condition | Stay in India during Tax Year 2026-27 | Status under Section 6, ITA 2025 |
|---|---|---|
| General rule — any individual | Less than 182 days | Non-Resident |
| Indian citizen / PIO visiting India (basic rule) | Less than 60 days | Non-Resident |
| Indian citizen / PIO with Indian-sourced income exceeding Rs. 15 lakh | Less than 120 days | Non-Resident |
| Indian citizen not taxable anywhere on account of domicile / residence, with Indian income exceeding Rs. 15 lakh | Any stay — deemed resident | Deemed Resident (RNOR — Resident but Not Ordinarily Resident) |
03 TDS Obligations of the Indian Resident Buyer
Under the Income Tax Act 2025 (effective 1 April 2026), TDS on payments to non-residents is governed by Section 393(2). The old Section 195 of ITA 1961 stands repealed. The buyer must deduct TDS before making any payment — token advances, part payments, and final balance — to the NRI seller. Critically, both the form used and the TRACES payment codes have changed entirely.
Governing Provisions — ITA 2025 vs ITA 1961
| Aspect | ITA 2025 (Current — Tax Year 2026-27) | ITA 1961 (Earlier) |
|---|---|---|
| Governing Section | Section 393(2), IT Act 2025 — TDS on payments to non-residents other than salary | Section 195, IT Act 1961 |
| TRACES Payment Code | Code 1041 — LTCG on immovable property (NRI). Code 1042 — STCG on immovable property (NRI). Mandatory from 1 April 2026. Full TRACES Code Chart | Section number “195” cited in Form 27Q. No 4-digit TRACES code system. |
| Challan-cum-Statement | Form 141 — Unified form under Section 393. Path: IT Portal → e-File → E-pay Tax → ITA 2025 → New Payment → Form 141 | Form 26QB (resident, S.194-IA) / Form 27Q (NRI, S.195) — both repealed |
| Quarterly TDS Return | Form 144 — Quarterly return for NRI/foreign company TDS under IT Rules 2026 | Form 27Q — replaced by Form 144 |
TDS Rates Under Section 393(2), ITA 2025 — NRI Property Sale (No DTAA / DTAA Not Claimed)
| Nature of Gain | TRACES Code (ITA 2025) | Holding Period | Base Rate | Surcharge | Cess | Effective Rate (Approx.) |
|---|---|---|---|---|---|---|
| Long-Term Capital Gain (LTCG) | 1041 | More than 24 months | 12.5% | 10% (50L-1Cr) / 15% (1Cr-2Cr) / 25% (2Cr-5Cr) / 37% (above 5Cr) | 4% | ~14.30% to ~17.94% |
| Short-Term Capital Gain (STCG) | 1042 | Up to 24 months | 30% | 10% / 15% / 25% / 37% as applicable | 4% | ~34.32% to ~42.74% |
TDS is deducted on the entire sale consideration, not the capital gain. Surcharge: 10% (50L-1Cr) / 15% (1Cr-2Cr) / 25% (2Cr-5Cr) / 37% (above 5Cr). Cess: 4% Health & Education Cess. Marginal relief applicable. See TDS Rate Chart 2026-27.
Step-by-Step: Buyer’s TDS Compliance under ITA 2025
Obtain TAN — Section 203A, ITA 2025
Obtain Tax Deduction Account Number before making any payment. Apply via IT Portal / Protean (Form 49B). TAN is mandatory for Form 144 filing. [Earlier: Section 203A, ITA 1961 — same process]
Check for Lower Deduction Certificate — ITA 2025
Verify if NRI has a Lower / Nil TDS certificate issued by the AO. If furnished, deduct at the certified rate. If not, deduct at full rate (Code 1041 for LTCG or 1042 for STCG) on the entire sale consideration. [Earlier: Certificate under Section 197, ITA 1961 — equivalent provision re-enacted in ITA 2025]
Deduct TDS at time of payment or credit — whichever is earlier
TDS applies to each instalment, token advance, and the final payment. Identify correct TRACES code — 1041 (property held over 24 months = LTCG) or 1042 (held up to 24 months = STCG). Deduct on full consideration amount, not just the gain.
File Form 141 — Challan-cum-Statement (replaces Form 26QB / Form 27Q)
Navigate: IT Portal → e-File → E-pay Tax → select Income Tax Act 2025 → New Payment → select Form 141. Deposit TDS within 7 days from end of month of deduction (30 April for March deductions). [Earlier: Form 26QB (resident seller) / Form 27Q (NRI seller) — both replaced by Form 141 from 1 April 2026]
File Quarterly TDS Return — Form 144 (replaces Form 27Q)
File Form 144 — quarterly TDS return for non-resident payments under IT Rules 2026 — using TRACES codes 1041/1042 (not old section numbers). Due: Q1 — 31 Jul 2026; Q2 — 31 Oct 2026; Q3 — 31 Jan 2027; Q4 — 31 May 2027. NRI seller’s PAN is mandatory. [Earlier: Form 27Q under ITA 1961 / IT Rules 1962 — replaced by Form 144 from 1 April 2026]
Issue TDS Certificate to NRI — downloaded from TRACES
After Form 144 is processed, download TDS certificate from TRACES (ITA 2025 format, reflecting Tax Year). Issue to NRI within 15 days of due date of Form 144. NRI needs this to claim TDS credit in Indian ITR and for FEMA repatriation documentation.
04 Capital Gains Computation for NRI Seller
Charge of Capital Gains — Section 57, ITA 2025
Under Section 57, Income Tax Act 2025, any profits or gains arising from transfer of a capital asset in a Tax Year are chargeable to income tax under the head “Capital Gains.” The transfer of immovable property by an NRI constitutes a taxable event under this section. [Earlier: Section 45, ITA 1961 — re-enacted as Section 57, ITA 2025]
Classification: Long-Term vs Short-Term — Section 2(42A) / Schedule, ITA 2025
The holding period for immovable property (land, building, flat) is 24 months under ITA 2025. Property held for more than 24 months from date of acquisition is a Long-Term Capital Asset; 24 months or less is Short-Term. [Earlier: Section 2(42A), ITA 1961 — identical 24-month threshold for immovable property; re-enacted in ITA 2025]
LTCG Computation — Section 58, ITA 2025 (Tax Year 2026-27)
Special NRI Rule — Foreign Currency Conversion Benefit: First Proviso to Section 58, ITA 2025
The First Proviso to Section 58, ITA 2025 retains the special NRI capital gains computation method. Where the NRI acquired the property using foreign exchange (remittance, NRE/FCNR account), the gain is computed in foreign currency and reconverted to INR — often yielding a significantly lower taxable gain. [Earlier: First Proviso to Section 48, ITA 1961 — re-enacted as First Proviso to Section 58, ITA 2025]
| Step | Action | Exchange Rate Reference (IT Rules 2026) |
|---|---|---|
| 1 | Convert cost of acquisition from INR to relevant foreign currency | Rate for year of acquisition — RBI reference rate as prescribed in IT Rules 2026 |
| 2 | Convert sale consideration from INR to same foreign currency | Rate for Tax Year 2026-27 (year of sale) |
| 3 | Compute capital gain in foreign currency (Step 2 minus Step 1) | — |
| 4 | Reconvert capital gain amount back to INR | Rate for Tax Year 2026-27 (year of sale) |
Both methods (Section 58 standard and First Proviso foreign currency method) should be computed; the one resulting in lower taxable gain is adopted.
Deemed Consideration — Section 50C Equivalent, ITA 2025
Where the actual sale consideration is lower than the stamp duty value (circle rate value) of the property, the stamp duty value is deemed to be the full value of consideration for capital gains computation — unless the actual consideration is within 110% of the stamp duty value (tolerance band). This provision is re-enacted in ITA 2025. [Earlier: Section 50C, ITA 1961]
05 Capital Gains Tax Rates for NRI — Tax Year 2026-27
Tax rates on capital gains for NRIs are governed by Section 67 (LTCG) and Section 68 (STCG), ITA 2025. [Earlier: Sections 112 and 111A/slab rates, ITA 1961]
| Type of Gain | ITA 2025 Section | Holding Period | Tax Rate | Indexation | Basic Exemption Limit for NRI |
|---|---|---|---|---|---|
| LTCG on immovable property | Section 67, ITA 2025 [Earlier: S.112] | More than 24 months | 12.5% + surcharge + 4% cess | No indexation (property acquired after 23-Jul-2024). Option: 20% + CII indexation for pre-23-Jul-2024 assets (grandfathered) |
NRI is NOT eligible to set off basic exemption against LTCG on property |
| STCG on immovable property | Section 68 / Slab rates, ITA 2025 [Earlier: Slab rate under S.4/S.112A] | Up to 24 months | 30% (highest slab for NRI) + surcharge + cess | Not applicable | Basic exemption limit can be adjusted against STCG if total income (excluding LTCG) is below exemption threshold |
06 Exemption Planning for NRI Seller
An NRI seller can significantly reduce or eliminate capital gains tax through reinvestment under the following provisions of the Income Tax Act 2025. Section numbers are re-enacted with the same numbers as ITA 1961 in most cases — but always verify the ITA 2025 text for any drafting nuances:
| Section (ITA 2025) | Nature of Gain | Investment Required | Time Limit | Key Conditions and Cap |
|---|---|---|---|---|
| Section 54, ITA 2025 [S.54, ITA 1961 — re-enacted] |
LTCG from transfer of a residential house property | Purchase of 1 new residential house property in India | 1 year before or 2 years after the date of transfer; 3 years if constructing | Cap: Rs. 10 crore — reinvestment above Rs. 10 Cr does not yield additional exemption. New property must not be transferred within 3 years. NRI can purchase in India. |
| Section 54EC, ITA 2025 [S.54EC, ITA 1961 — re-enacted] |
LTCG from transfer of any long-term capital asset (land / building) | Investment in specified long-term bonds: NHAI or REC (notified series for Tax Year 2026-27) | Within 6 months from date of transfer | Cap: Rs. 50 lakh per Tax Year (Rs. 50 lakh across both financial years if sale straddles two Tax Years). Bonds must be held 5 years — premature redemption forfeits exemption. NRI can invest from NRO account. |
| Section 54F, ITA 2025 [S.54F, ITA 1961 — re-enacted] |
LTCG from transfer of any long-term capital asset other than a residential house (e.g., plot of land, commercial property) | Full net sale consideration (not just gain) must be invested in 1 new residential house in India | 1 year before or 2 years after transfer; 3 years if constructing | Cap: Rs. 10 crore. NRI must not own more than 1 residential house (other than the new one) on date of transfer. Proportionate exemption if partial reinvestment. New property not to be sold within 3 years. |
| Capital Gains Account Scheme (CGAS) [Re-notified under IT Rules 2026] |
Parking unutilised capital gains pending reinvestment | Deposit in CGAS before ITR due date: Type A (savings) or Type B (fixed deposit) at a designated bank in India | Deposit before ITR due date: 31 July 2026 (non-audit NRI). Utilise within Section 54 / 54F time limits. | NRI can open CGAS at designated banks in India. Unutilised amount at end of Section 54 / 54F time limit becomes taxable in that Tax Year. IT Rules 2026 re-notifies CGAS banks and account types. |
07 Lower / Nil TDS Certificate — Section 197
Since TDS is deducted on the full sale consideration but tax is actually payable only on the capital gain (which is usually much lower), NRI sellers almost always face excess TDS. The Lower Deduction Certificate under Section 197 is the most effective solution to avoid this cash-flow blockage.
Application: TRACES Portal — Form 13 (now integrated in IT Portal)
The NRI seller applies online on the Income Tax Portal (e-proceedings section) in Form 13 with computation of actual capital gains, applicable exemptions, and estimated tax liability for the year.
Documents Required
Sale deed / agreement, purchase deed with cost details, passport copy and NRI status proof, PAN card, bank statement of NRO/NRE account, and CA-certified computation of capital gains.
Processing and Timeline
The Assessing Officer issues the certificate typically within 28-30 days (subject to department workload). The certificate specifies the applicable rate — often ranging from nil to the actual effective rate on the gain. The certificate is valid till the end of the tax year.
Buyer Deducts at Certified Rate
Once the NRI furnishes the certificate to the Indian buyer, the buyer is obligated to deduct TDS only at the rate specified in the certificate — not the standard rate. The buyer must verify the certificate’s validity and mention its details in Form 27Q.
08 Compliance Checklist
Indian Resident Buyer — Obligations
| Compliance Requirement | IT Act 2025 / IT Rules 2026 (Current) | IT Act 1961 / IT Rules 1962 (Earlier — for reference) |
|---|---|---|
| TAN Requirement Buyer must hold a valid Tax Deduction Account Number before making any payment to NRI seller. |
Section 203A, IT Act 2025. Apply via Form 49B on IT Portal / Protean. TAN mandatory for Form 27Q filing. TDS Return Filing Services | [Section 203A, IT Act 1961 — identical provision, no change in substance] |
| NRI Status Verification Buyer must independently verify that the seller qualifies as Non-Resident for the relevant Tax Year. |
Section 6, IT Act 2025 — residential status based on stay of less than 182 days in Tax Year. Buyer to obtain: copy of passport with visa stamps, FEMA declaration by seller, and bank account type (NRO/NRE) confirmation. | [Section 6, IT Act 1961 — same basis. Term “Previous Year” used instead of “Tax Year”] |
| TDS Deduction — Governing Section Deduct on entire sale consideration at time of credit or payment, whichever is earlier. |
Section 195, IT Act 2025 — TDS on payment to non-resident. Rate: 12.5% + surcharge + 4% cess for LTCG; 30% + surcharge + cess for STCG. Deduct on full sale consideration. TDS Rate Chart 2026-27 | [Section 195, IT Act 1961 — same section number, re-enacted in IT Act 2025. Earlier LTCG rate was 20% with indexation; now 12.5% without indexation per Finance Act 2024 carried forward] |
| Lower TDS Certificate Buyer deducts at rate specified in certificate if NRI produces one. |
Section 197, IT Act 2025 — Application by NRI via IT Portal. New: under IT Rules 2026, the AO must dispose of Form 13 application within 30 days (Rule 28AA equivalent under new Rules). Certificate specifies TY validity. | [Section 197, IT Act 1961 / Rule 28AA, IT Rules 1962 — Rule 28AA mandated 30-day disposal period. No substantive change; now codified in IT Rules 2026] |
| TDS Deposit — Challan and Timing Deposit deducted TDS to government within prescribed time. |
Section 200, IT Act 2025 read with Rule 30, IT Rules 2026: Within 7 days from end of the month of deduction (30 April for March deductions). Challan: ITNS 281, Minor Head 200 (regular) / 400 (demand). Payment via IT Portal / bank NEFT. | [Section 200, IT Act 1961 / Rule 30, IT Rules 1962 — same time limits. Rule 30 re-enacted in IT Rules 2026 with identical deposit schedule] |
| TDS Return — Form and Due Date File quarterly TDS return for NRI payments. Critical: use correct form. |
Section 200(3), IT Act 2025 read with Rule 31A, IT Rules 2026: File Form 27Q (Statement of TDS for payments to non-residents other than salary). Due: 31 days from end of quarter (Q4: 31 May). NOT Form 26QB which applies to resident seller. File TDS Return with us | [Section 200(3), IT Act 1961 / Rule 31A, IT Rules 1962 — Form 27Q existed under old rules also. IT Rules 2026 re-notifies Form 27Q with updated fields to capture Tax Year (not AY) and new surcharge slabs] |
| TDS Certificate to NRI Seller Issue TDS certificate to NRI so they can claim credit in Indian ITR. |
Section 203, IT Act 2025 read with Rule 31, IT Rules 2026: Issue Form 16A within 15 days from due date of Form 27Q. Download generated Form 16A from TRACES portal (digitally signed). New vs Old Forms — IT Act 2025 | [Section 203, IT Act 1961 / Rule 31, IT Rules 1962 — Form 16A prescribed. IT Rules 2026 revise the Form 16A template to reflect Tax Year nomenclature and updated surcharge slabs; download from TRACES remains mandatory] |
| Property Registration State Sub-Registrars increasingly require TDS compliance proof before registering the property. |
IT Act 2025 does not prescribe this directly — it is a state-level requirement. Many states (Delhi, Maharashtra, Karnataka) require acknowledgement of Form 27Q / Challan 281 before registration. Ensure TDS compliance is complete before registration appointment. | [Same position under IT Act 1961 — no statutory link, but administrative practice continues unchanged] |
| Record Retention | Section 285BA / Section 133, IT Act 2025: Retain all TDS-related records (challan, Form 27Q, Form 16A, property agreement, NRI declaration) for 7 years from end of Tax Year. | [Section 44AA / Section 133, IT Act 1961 — 6 years was informal standard. IT Act 2025 aligns with 7-year retention norm for TDS records] |
| Default Consequences | Section 271C, IT Act 2025: Penalty equal to TDS amount not deducted. Section 201(1A), IT Act 2025: Interest at 1.5% per month from date TDS was deductible to date of deposit. Section 276B: Prosecution for wilful failure. Got a Notice? We can help. | [Sections 271C, 201(1A), 276B, IT Act 1961 — same section numbers re-enacted. Penalty quantum unchanged. Interest rate unchanged at 1.5%/month] |
NRI Seller — Obligations
| Compliance Requirement | IT Act 2025 / IT Rules 2026 (Current) | IT Act 1961 / IT Rules 1962 (Earlier — for reference) |
|---|---|---|
| PAN Requirement Indian PAN mandatory for NRI to receive sale proceeds and claim TDS credit. |
Section 139A, IT Act 2025: PAN mandatory. Without PAN, buyer deducts TDS at 20% under Section 206AA. PAN 2.0 (unified PAN-TAN) — NRI can apply via IT Portal using passport as primary KYC document (Form 49A). PAN 2.0 — What NRIs Need to Know | [Section 139A, IT Act 1961 — same. Section 206AA (higher TDS without PAN) re-enacted. PAN 2.0 is new as of 2024-25 — NRI PAN now linked to Aadhaar only if Indian resident; foreign passport continues as KYC for NRI PAN] |
| Section 197 Lower TDS Certificate Apply before transaction to avoid excess TDS blockage on full consideration. |
Section 197, IT Act 2025 + Rule 28 / Rule 28AA, IT Rules 2026: File Form 13 online on IT Portal under e-Proceedings. Submit CA-certified computation of capital gains, exemptions, and estimated tax. AO disposes within 30 days. Certificate valid for Tax Year 2026-27. Apply 6-8 weeks before sale. NRI Taxation Services | [Section 197, IT Act 1961 / Rule 28AA, IT Rules 1962 — Form 13 existed. IT Rules 2026: Form 13 template updated to use “Tax Year” and reflect new capital gains rates (12.5% LTCG). Substance unchanged.] |
| Capital Gains Computation | Section 48, IT Act 2025: LTCG = Sale consideration less Cost of Acquisition less Transfer expenses. No indexation for property acquired after 23-Jul-2024 (12.5% rate). Optional: 20% with indexation for pre-23-Jul-2024 property. First Proviso to Section 48: Foreign currency conversion benefit available for NRI sellers. Rule 115A, IT Rules 2026: Prescribes exchange rates for NRI capital gains computation. International Tax Advisory | [Section 48, IT Act 1961 — First and Second Provisos. Indexation (CII) was available under Second Proviso for all properties. Finance Act 2024 removed indexation for new acquisitions. Rule 115A, IT Rules 1962 prescribed exchange rates — re-notified in IT Rules 2026 with updated RBI reference rate mechanism] |
| Exemption Reinvestment | Sections 54, 54EC, 54F, IT Act 2025: Reinvest LTCG in new residential property (Section 54 / 54F — cap Rs. 10 Cr) or specified bonds (Section 54EC — Rs. 50 lakh, 5-year lock-in). CGAS deposit before ITR due date if reinvestment not completed. Rule 6, IT Rules 2026 (CGAS-related): Designated bank list and account types (Type A — SB; Type B — FD) re-notified. Capital Gains Planning — Consult Us | [Sections 54, 54EC, 54F, IT Act 1961 — same sections re-enacted. Key change: Rs. 10 Cr cap on Section 54 / 54F exemption introduced by Finance Act 2023, retained in IT Act 2025. Section 54EC bond limit of Rs. 50 lakh unchanged. CGAS rules under IT Rules 1962 — re-notified in IT Rules 2026] |
| Advance Tax Obligation If tax liability on capital gains exceeds Rs. 10,000 for the Tax Year. |
Section 208 / Section 211, IT Act 2025: Advance tax in 4 instalments — 15% by 15 Jun; 45% by 15 Sep; 75% by 15 Dec; 100% by 15 Mar. NRIs with Indian income are equally liable for advance tax. Interest under Sections 234B and 234C if short/delayed. Advance Tax Guide and Calculator | [Sections 208, 211, IT Act 1961 — same instalment schedule. Sections 234B, 234C re-enacted in IT Act 2025 with identical interest rates (1% per month / part month). No change in substance.] |
| ITR Filing NRI must file Indian ITR even if full TDS is deducted, to claim refund / report income. |
Section 139, IT Act 2025: ITR mandatory for NRI with Indian capital gains. Applicable form: ITR-2 (capital gains, no business income) or ITR-3 (with business income). IT Rules 2026 / CBDT Notification: ITR forms updated to use “Tax Year” column (not “Assessment Year”). File on IT Portal. Due: 31 July 2026 (non-audit); 31 October 2026 (audit). ITR Filing Services | New ITR Forms Guide | [Section 139, IT Act 1961 — same filing obligation. ITR-2 and ITR-3 existed. Key change: IT Rules 2026 re-notify ITR forms replacing “Assessment Year” with “Tax Year” throughout all ITR form schedules. No change in filing obligation or due dates.] |
| Form 15CA / 15CB — Repatriation Mandatory before bank remits sale proceeds from India to NRI’s foreign account. |
Section 195(6), IT Act 2025 read with Rule 37BB, IT Rules 2026: File Form 15CA (Part C) on IT Portal; CA to certify Form 15CB. Bank will not remit without these documents. Rule 37BB, IT Rules 2026 re-notified — list of exempt remittances and Part-wise applicability of Form 15CA retained from earlier rules. Complete Guide: Form 15CA/15CB | [Section 195(6), IT Act 1961 / Rule 37BB, IT Rules 1962 — Rule 37BB introduced in 2013. IT Rules 2026 retain Rule 37BB with no substantive change to the 15CA/15CB requirement. Form templates updated to use Tax Year terminology.] |
| DTAA Benefit Claim If NRI is resident of a DTAA country and seeks treaty benefit in India. |
Section 90 / Section 91, IT Act 2025: DTAA benefit available. NRI must furnish Tax Residency Certificate (TRC) from foreign country + Form 10F (self-declaration). Form 10F now filed on IT Portal (online mandatory since IT Rules 2022 amendment, continued under IT Rules 2026). DTAA Advisory Services | [Sections 90/91, IT Act 1961 / Rule 21AB, IT Rules 1962 — Form 10F was paper-based until 2022. IT Rules 2026 continue mandatory online filing of Form 10F. TRC requirement unchanged. Section numbers re-enacted in IT Act 2025.] |
| Interest on Short / Delayed Tax | Section 234A (delay in ITR filing): 1% per month on unpaid tax. Section 234B (short advance tax): 1% per month. Section 234C (deferred advance tax instalments): 1% per month per instalment. All re-enacted in IT Act 2025 with identical rates. Interest under 234A/234B/234C — Explained | [Sections 234A, 234B, 234C, IT Act 1961 — re-enacted verbatim in IT Act 2025. No change in rates or computation method.] |
Key Due Dates — Tax Year 2026-27 (NRI Property Sale)
| Compliance | Applicable Party | Governing Provision IT Act 2025 / IT Rules 2026 | Due Date |
|---|---|---|---|
| TDS deposit — Q1-Q3 monthly | Indian Buyer | Section 200 / Rule 30, IT Rules 2026 | 7th of following month |
| TDS deposit — March deductions | Indian Buyer | Section 200 / Rule 30, IT Rules 2026 | 30 April 2027 |
| Advance Tax — Instalment 1 | NRI Seller | Section 211, IT Act 2025 | 15 June 2026 (15% of liability) |
| Advance Tax — Instalment 2 | NRI Seller | Section 211, IT Act 2025 | 15 September 2026 (45% cumulative) |
| Advance Tax — Instalment 3 | NRI Seller | Section 211, IT Act 2025 | 15 December 2026 (75% cumulative) |
| Advance Tax — Instalment 4 (Final) | NRI Seller | Section 211, IT Act 2025 | 15 March 2027 (100%) |
| Form 27Q — Q1 (Apr-Jun 2026) | Indian Buyer | Section 200(3) / Rule 31A, IT Rules 2026 | 31 July 2026 |
| Form 27Q — Q2 (Jul-Sep 2026) | Indian Buyer | Section 200(3) / Rule 31A, IT Rules 2026 | 31 October 2026 |
| Form 27Q — Q3 (Oct-Dec 2026) | Indian Buyer | Section 200(3) / Rule 31A, IT Rules 2026 | 31 January 2027 |
| Form 27Q — Q4 (Jan-Mar 2027) | Indian Buyer | Section 200(3) / Rule 31A, IT Rules 2026 | 31 May 2027 |
| CGAS deposit to protect exemption | NRI Seller | Sections 54 / 54F, IT Act 2025 / Rule 6, IT Rules 2026 | Before ITR due date (31 Jul 2026) |
| ITR Filing — no audit case | NRI Seller | Section 139(1), IT Act 2025 | 31 July 2026 |
| ITR Filing — audit required | NRI Seller | Section 139(1), IT Act 2025 | 31 October 2026 |
| Form 15CA / 15CB (before remittance) | NRI Seller | Section 195(6) / Rule 37BB, IT Rules 2026 | Before each remittance event |
09 FEMA Compliance and Repatriation of Sale Proceeds
Repatriation of sale proceeds by an NRI seller is governed by the Foreign Exchange Management Act, 1999 (FEMA) and RBI Master Directions. Tax compliance and FEMA compliance are parallel obligations — the fact that TDS has been deducted does not by itself permit repatriation.
| Scenario | Route | Limit | Documents |
|---|---|---|---|
| NRI acquired property from remittance / NRE/FCNR funds (FEMA-compliant acquisition) | Repatriate through NRE Account / FCNR account directly | Amount limited to original cost; capital gains can be repatriated freely if all taxes paid | Proof of original purchase (source of funds), tax compliance certificate, CA certificate |
| NRI acquired property from NRO / Indian earnings | Repatriate from NRO Account | USD 1 million per financial year (aggregate all transactions) | Form 15CA (Part C) + Form 15CB (CA Certificate) + declaration in bank prescribed format |
| Inherited / gift property | NRO Account repatriation | USD 1 million per financial year | Proof of inheritance / gift deed, Form 15CA/15CB, tax clearance |
Form 15CA / 15CB — Mandatory for Remittance Abroad
Before the NRI’s Indian bank remits the sale proceeds outside India, the following must be completed:
- Form 15CB: Certificate from a Chartered Accountant confirming that the remittance is net of applicable Indian taxes. The CA verifies TDS deduction, capital gains computation, and applicable DTAA provisions.
- Form 15CA: Declaration by the NRI (remitter) filed on the IT Portal. Part C of Form 15CA is filed when Form 15CB is applicable (remittance exceeds Rs. 5 lakh in aggregate or as threshold).
- Both must be uploaded on the IT Portal and provided to the authorized dealer bank before the remittance is effected.
10 Numerical Illustration
Transaction Details
Property Type
Residential Flat, Delhi
Purchase Date
1 April 2019
Purchase Price
Rs. 60,00,000
Sale Date
1 November 2026
Sale Price
Rs. 1,80,00,000
Brokerage
Rs. 1,80,000 (1%)
Seller Status
NRI (UK resident)
Buyer
Indian Resident Individual
Capital Gains (No Indexation — 12.5%)
Sale Consideration
1,80,00,000
Less: Cost of Acquisition
60,00,000
Less: Brokerage
1,80,000
LTCG
1,18,20,000
Tax @ 12.5%
14,77,500
Surcharge @ 15%
2,21,625
Cess @ 4%
67,965
Total Tax
17,67,090
11 Frequently Asked Questions
Q1. Can an NRI sell agricultural land in India?
Under FEMA, an NRI cannot purchase agricultural land, plantation property, or farmhouse in India. However, if the NRI acquired agricultural land by way of inheritance or as a resident Indian, they can sell it. Capital gains from such sale are taxable. The Indian buyer is required to deduct TDS under Section 195. Agricultural land in rural areas (as defined) is not a capital asset and no capital gains tax applies.
Q2. Is GST applicable on NRI property sales?
GST is not applicable on sale of immovable property by NRI if the property is completed and a completion/occupancy certificate has been issued. GST applies only on under-construction property (at 5% for residential without ITC, or 1% for affordable housing). Capital gains tax under income tax is separate from GST.
Q3. What happens if the Indian buyer fails to deduct TDS?
The buyer is treated as an “assessee in default” under Section 201 of the Income Tax Act 2025. Consequences include: interest under Section 201(1A) at 1.5% per month from the date TDS was deductible to the date of actual deposit; penalty under Section 271C equal to the amount of TDS not deducted; and potential prosecution under Section 276B. The buyer cannot claim the purchase price as a deduction in their accounts until TDS default is rectified.
Q4. Can the NRI seller avoid filing an ITR in India?
No. If the NRI has capital gains from Indian property exceeding the basic exemption threshold (or if they want to claim a refund of excess TDS), filing of ITR in India is mandatory. ITR-2 is the applicable form for NRIs with capital gains and no business income. Filing is done on the Income Tax Portal using the NRI’s Indian PAN.
Q5. Can the NRI invest in 54EC bonds from abroad?
Yes. The NRI can invest in NHAI / REC 54EC bonds from their NRO account in India. The investment must be within 6 months of the sale. The bonds are denominated in INR and cannot be transferred or encashed before 5 years. On maturity, the proceeds can be repatriated subject to FEMA rules (USD 1 million limit from NRO account).
Q6. What if the NRI seller does not have an Indian PAN?
TDS under Section 206AA would be deducted at 20% (or the applicable rate, whichever is higher) if the NRI does not furnish PAN. It is strongly recommended for every NRI to obtain an Indian PAN before entering into a property sale transaction. PAN application can be made from abroad using Form 49A through authorised agents.
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