NRI Selling Property in India: Complete Guide to Sell Property Smoothly

Owning property in India while living abroad can feel like keeping a piece of home close, even from thousands of miles away. But when the time comes to sell, it often brings a mix of excitement and uncertainty. You may wonder how to manage legal formalities efficiently from another country, what taxes you will need to pay, and how to safely transfer the proceeds to your account overseas.

For many NRIs, selling property may seem complex, but proper planning and expert guidance simplify the process. By understanding legal steps, preparing documents, and following tax and repatriation rules, you can complete the sale smoothly and maximize returns.

This guide explains how NRIs can efficiently sell property, manage formalities stress-free, and transfer funds safely abroad.

What Properties Can NRIs Sell in India?

First, let’s understand the types of properties that NRIs are allowed to sell in India:

• Residential property – apartments, houses, villas
  
• Commercial property – offices, shops, or commercial complexes

They can sell to:

• Resident Indians
  
• Other NRIs or PIOs (Persons of Indian Origin)

Restrictions:

• NRIs cannot buy or sell agricultural land, farmhouses, or plantation property.
  
• Inherited agricultural land can only be sold to resident Indians.
  
• Proceeds from inherited property may require RBI approval under FEMA Section 6(5).

Tip: For inherited property or restricted assets, a chartered accountant (CA) or legal advisor can guide you through regulatory compliance and repatriation rules, which is crucial for NRI selling property in  India.

Selling Property While Abroad

If you cannot visit India, you can appoint a Power of Attorney (POA):

• POA can be a family member or trusted friend.
  
• Document must be notarized and attested by the Indian consulate in your country of residence.
  
• The POA must be stamped and registered in India within three months of execution.

The POA can handle sale agreements, TDS deductions, registration, and fund transfers, making NRI selling property in India manageable even from overseas.

Understanding TDS on Sale of Property

The buyer deducts TDS (Tax Deducted at Source) before paying you.

Key Points:

• TDS is on capital gains, not full sale value.
  
• Buyers must obtain a TAN and deposit TDS to the Income Tax Department by the 7th of the following month.
  
• Buyers file Form 27Q quarterly and issue Form 16A to the seller.

Tip: A chartered accountant can help calculate correct TDS, apply for lower/nil deduction certificates, and ensure compliance, which is essential for smooth NRI selling property in India.

Capital Gains Tax

Capital gains tax depends on how long you’ve held the property:

• Short-term gains: Taxed at applicable income slab rates
  
• Long-term gains: 12.5% without indexation (after 23 July 2024) or 20% with indexation (before 23 July 2024)

NRIs can reduce LTCG liability using exemptions under Sections 54, 54F, and 54EC:

1. Section 54 – Sale of Residential Property

• Eligibility: Individuals and HUFs selling a long-term residential house property
  
• Reinvestment: Purchase within 1 year before or 2 years after sale; construction within 3 years
  
• Maximum exemption: ₹10 crore (AY 2024-25)

Note: Can invest in up to 2 properties if gains ≤ ₹2 crore; available once in a lifetime

2. Section 54F – Sale of Any Asset Other Than Residential Property

• Eligibility: Individuals and HUFs selling any long-term capital asset other than a house
  
• Reinvestment: Same as Section 54
  
• Exemption: Proportional to net sale consideration reinvested, up to ₹10 crore

3. Section 54EC – Investment in Specified Bonds

• Eligibility: Any taxpayer, including NRIs, selling a long-term capital asset
  
• Investment: NHAI, REC, PFC, IRFC bonds, up to ₹50 lakh per financial year
  
• Timeline: Within 6 months of sale; 5-year lock-in

Note: Interest is taxable, principal exempt from capital gains tax

Need expert help with TDS and capital gains? Talk to your NRI expert CA now

Repatriation of Sale Proceeds

NRIs can repatriate proceeds from the sale of property abroad if it was purchased through FEMA-compliant methods and funded via foreign currency or NRE/FCNR accounts.

• Limit: Only two residential properties per NRI are eligible for repatriation, with a maximum of $1 million per financial year.
  
• Steps:
  • Submit Form 15CA (self-declared).
  • Submit Form 15CB (signed by a CA).
  • Transfer funds up to $1 million annually.

Professional help is essential: A CA ensures forms are certified and RBI compliance is met, simplifying NRI selling property in India significantly.

Also, read more: Repatriation of Sale Proceeds: NRI Selling Property in India 

Documents Required for NRI Property Sale

Country-Specific Tax Considerations

• India has Double Taxation Avoidance Agreements (DTAA) with many countries.
  
• You may need to report the sale to your local tax authority (e.g., IRS in the US).
  
• Repatriated funds may require FBAR or Form 3520 reporting in the US.
  
• Consult a financial or tax advisor in your country of residence for compliance.

Step-by-Step Sale Process for NRIs

1. Verify property eligibility.
   
2. Appoint a POA if absent.
   
3. Prepare all required documents.
   
4. Identify buyers and negotiate terms.
   
5. Draft and sign sale agreement.
   
6. Deduct TDS with buyer and/or CA help.
   
7. Register sale deed at sub-registrar office.
   
8. File capital gains tax return and claim exemptions.
   
9. Repatriate funds using Forms 15CA & 15CB.
   
10. Report international transfers to local tax authorities.

Following these steps ensures a hassle-free NRI selling property in  India experience.

The Bottom Line

Selling property in India as an NRI can seem daunting, but with the right guidance, it can be a smooth and rewarding experience. Partnering with a trusted chartered accountant and a legal or tax advisor ensures that TDS is handled accurately, capital gains are optimized, and all eligible exemptions are claimed. 

Repatriating your hard-earned money abroad becomes hassle-free when you correctly complete Forms 15CA and 15CB, staying fully compliant with RBI regulations. Additionally, with planning and expert support, NRI property sales in India can be seamless and profitable.

Expert Assistance for NRIs

Selling property in India as an NRI involves multiple steps like TDS compliance, capital gains tax, FEMA rules and repatriation. Even a small error can cause delays, but with CA Mohit Gopwani, NRI expert CA, SRCC alumnus, CFA (Level 3) candidate and specialist with 8+ years of experience, the process becomes smooth and error-free. He has helped over 4,000 NRIs with property sales, repatriation and tax returns, ensuring you sell confidently, reduce taxes and transfer funds abroad without hassle.

Make your property sale error-free. Book a free consultation with our NRI expert CA.

FAQs

Q1. What are the rules for NRI selling property in India?
NRIs can sell residential and commercial property but cannot sell agricultural land, farmhouses, or plantation property. Inherited property may require RBI approval.

Q2. Can NRI give Power of Attorney to sell property in India?
Yes, POA can handle agreements, TDS, registration, and fund transfers. Must be notarized, attested, stamped, and registered in India.

Q3. Is the Aadhaar card mandatory for NRI to sell property?
No, Aadhaar is not mandatory for NRIs. However, having Aadhaar can simplify property registration, tax filings, and financial transactions. NRIs who have stayed in India for at least 182 days in the preceding 12 months can apply for an Aadhaar card.

Q4. How to avoid capital gains tax on property for NRI?
NRIs can reduce or avoid LTCG tax by using exemptions under Sections 54, 54F, and 54EC:

• Section 54: Reinvest gains in a new residential property in India.
  
• Section 54F: Reinvest proceeds from non-house assets into a residential property.
  
• Section 54EC: Invest in specified bonds (NHAI, REC, PFC, IRFC) within 6 months, subject to a 5-year lock-in.

Q5. What taxes do NRIs need to pay when selling property in India?
NRIs are liable to pay capital gains tax:

• STCG: Short-term gains (≤2 years) are taxed at income slab rates
  
• LTCG: Long-term gains (>2 years) are taxed at 12.5% without indexation or 20% with indexation
  
• TDS: Buyers deduct tax at source (30% STCG, 12.5% LTCG plus surcharge/cess) before payment. A CA can help reduce TDS or ensure compliance.

Q6. Can NRIs have an Aadhaar card?
Yes, NRIs who have spent at least 182 days in India in the last 12 months can enroll for Aadhaar using Passport, OCI card, and proof of Indian address.

Q7. Can NRIs sell inherited property in India?
Yes, NRIs can sell inherited property, but agricultural land can only be sold to resident Indians, and repatriation may require RBI approval.

Q8. Can NRIs open NRO or NRE accounts to receive sale proceeds?
Yes, NRO accounts are used to receive sale proceeds in India. NRE accounts allow repatriation of funds abroad.

Q9. Are there any country-specific tax obligations for NRIs?
Yes, India has DTAA agreements with many countries. Repatriated funds may also need to be reported to foreign tax authorities (e.g., FBAR / IRS in the US).

Q10. Can NRIs claim Section 54 exemption more than once?
No, the Section 54 exemption for capital gains on residential property is available once in a lifetime.

Q11. Can an NRI register a property sale via Power of Attorney (POA)?
Yes, NRIs can authorize a POA to complete the sale process, including registration, TDS deduction, and fund transfer.

Q12. Can NRIs sell multiple properties in a single financial year?
Yes, but repatriation limits apply (two residential properties per NRI, max $1 million). Capital gains tax and exemptions must be calculated individually for each property.