If you are an NRI residing in the USA or Canada and planning to sell your assets back home, understanding the process of NRIs selling property in India is essential. This guide is designed to simplify the legal procedures, tax obligations, and documentation involved, helping you stay compliant and maximize your returns during the property sale.
Understanding Capital Gains Tax for NRIs
When selling property in India, NRIs are subject to capital gains tax, which is based on how long they have owned the property.
Short-Term Capital Gains (STCG):
Short-term capital gains apply if the property is sold within 24 months of purchase. The tax is calculated based on the seller’s income tax slab (up to 30%).
Long-Term Capital Gains (LTCG):
Long-term capital gains apply if the property has been owned for more than 24 months. The tax on LTCG is levied at a flat rate of 12.5% (without indexation benefit).
Pro Tip: You can claim exemptions under Section 54 of the Income Tax Act by reinvesting the capital gains in another residential property in India.
How to Lower TDS on Property Sales for NRIs
TDS (Tax Deducted at Source) can be a significant concern for NRIs when selling property in India. The buyer deducts TDS before making the payment, and the rate varies based on the value of the property.
Revised TDS Rates for NRIs
| Property Value | TDS Rate (LTCG) |
| Less than ₹50 Lakhs | 13% |
| ₹50 Lakhs – ₹1 Crore | 14.3% |
| ₹1 Crore to ₹2 Crores | 14.95% |
| ₹2 Crores to ₹5 Crores | 16.25% |
| Above ₹5 Crores | 17.81% |
Lowering TDS Legally
To legally reduce your TDS liability:
- Apply for a Lower TDS Certificate (Form 13) from the Income Tax Department before the sale.
- Maximize Exemptions by structuring your sale to take advantage of available tax benefits and deductions.
- Claim a Refund for any excess TDS deducted by filing your Income Tax Return (ITR).
At NRI Edge, we can handle the entire TDS exemption application process, ensuring that you pay the lowest legally possible tax.
Essential Documents for Selling Property in India
Before selling property in India, make sure you have the following documents in place:
- Property Title Deed – Proof of ownership.
- Sale Agreement – Agreement between you and the buyer.
- Encumbrance Certificate (EC) – Ensures the property is free of any legal dues.
- Tax Receipts – Evidence that property taxes are up to date.
- PAN Card & ID Proof – Required for tax filing purposes.
- Passport and OCI Card (if available) – Needed for identity verification and establishing NRI status.
Missing any of these? At NRI Edge, we can help you obtain these documents remotely without requiring you to travel to India.
How to Transfer Sale Proceeds to the US or Canada
Once you have sold your property, transferring the funds back to the US or Canada requires careful compliance with RBI and FEMA guidelines.
Repatriation Limits
You can repatriate up to $1 million per financial year from your NRO account.
Required Documents for Repatriation
- Form 15CA & 15CB – Chartered Accountant certification confirming tax compliance.
- Sale Deed & Tax Payment Proof – Ensures legal sale and clearance of taxes.
- Bank Declaration Form – Required by Indian banks for repatriation.
At NRI Edge, we manage all the legal paperwork and RBI approvals, ensuring a smooth and efficient transfer of funds to your US or Canada bank account.
Future-Proofing Your NRI Property Investments
As India updates its tax regulations on foreign income, NRIs must stay proactive in ensuring compliance. Here are some essential steps:
- Regularly Review Your Residency Status: Keep updated on changes in NRI residency definitions for tax purposes.
- Report Foreign Earnings: Avoid legal risks by staying compliant with amendments to the Double Taxation Avoidance Agreement (DTAA).
- Careful Planning for Repatriation: Ensure you are following RBI & FEMA guidelines for fund transfers.
How NRI Edge Can Assist You
At NRI Edge, we specialize in guiding NRIs through the entire property selling process in India. From obtaining the necessary legal documentation to managing TDS exemptions and repatriation, our expertise ensures a seamless and legally compliant transaction.
Conclusion
Selling property can be complex, but with the right guidance, NRIs selling property in India can navigate tax laws, handle documentation, and repatriate funds smoothly. Trust expert advice to ensure your property sale is efficient, compliant, and financially rewarding.
Let NRI Edge take care of the complexities, so you can focus on securing the best deal with minimal tax impact.
Frequently Asked Questions (FAQs)
Q1: Can I sell my property in India and transfer the money to the USA?
Yes, NRIs can repatriate proceeds from the sale of property to the USA, but they must comply with RBI & FEMA regulations. There is a limit of $1 million per financial year for repatriation.
Q2: Can I sell property in India and transfer the funds to Canada?
Yes, NRIs selling property in India can transfer the funds to Canada. However, they are subject to capital gains tax in India and must comply with RBI & FEMA guidelines. They can reduce tax liability by reinvesting capital gains under Section 54 and 54F.
Q3: Do NRIs have to pay tax when selling property in India?
Yes, NRIs are subject to capital gains tax when selling property in India.
- LTCG: If held for over 24 months, taxed at 12.5%.
- STCG: If sold within 24 months, taxed according to the income tax slab (up to 30%).
TDS is also deducted at source (13-17.81% for LTCG, 30% for STCG).
Q4: Can an NRI sell property in India without an OCI card?
Yes, NRIs can sell property in India without an OCI card. They just need to provide verification through their Indian passport or foreign passport and visa details.
Q5: What is the Double Tax Avoidance Agreement (DTAA) between India and Canada?
The DTAA between India and Canada helps NRIs avoid double taxation by allowing them to claim tax credits in Canada for taxes paid in India.
Q6: Can an NRI inherit property in India?
Yes, NRIs can inherit property in India through a valid Will or by laws of intestate succession. They must comply with FEMA and local state laws before selling or transferring ownership.