NRI Selling Property in India 2026: TDS, Lower Deduction Certificate & Repatriation — Complete Guide

Selling property in India as an NRI should be straightforward. You find a buyer, agree on a price, register the sale deed — and then your money should come to you abroad. In practice, it rarely works that cleanly.

The TDS alone can shock you: the buyer is legally required to deduct 20% of the entire sale consideration (not just your profit) as tax before paying you. On a ₹1.5 crore property sale, that is ₹30 lakh held back by the government — whether your actual capital gain is ₹50 lakh or ₹5 lakh. Getting that money back requires filing an Indian income tax return and waiting months for a refund.

Then come the FEMA forms, the bank documentation requirements, the CA certificates — none of which your buyer's broker or the property registrar will walk you through. Most NRIs discover these requirements only after the sale deed is registered, by which point the leverage to plan around them is gone.

This guide covers everything — TDS rates, the Lower Deduction Certificate that can dramatically reduce upfront deduction, capital gains tax and Section 54 exemption, repatriation rules, and the Form 15CA/15CB process — so you can plan before, not scramble after.

Why NRI Property Sales Go Wrong — The Three Common Mistakes

Before getting into the mechanics, it helps to understand where NRIs lose money unnecessarily in property sales.

Mistake 1: Not Applying for a Lower Deduction Certificate in Time

The standard TDS rate on NRI property sales is 20% on the full sale consideration for long-term gains and 30% for short-term gains — plus surcharge and cess. This is applied to the entire sale price, not just your profit. If your actual tax liability is far lower (because your purchase cost was high, or you qualify for a Section 54 reinvestment exemption), you are overpaying by lakhs. The Lower Deduction Certificate, applied for before sale, fixes this — but it takes 30–60 days to obtain. Most NRIs miss this window entirely.

Mistake 2: Starting Form 15CA/15CB After the Sale

Forms 145 and 146 (previously 15CA and 15CB) are the CA-certified documents your bank requires before transferring sale proceeds abroad. Preparing them requires gathering the original purchase deed, cost of acquisition evidence, TDS certificates from the buyer, and ITR acknowledgements. NRIs who start this process after completing the sale typically face 3–6 month delays while documents are hunted down. Start simultaneously with sale negotiations.

Mistake 3: Routing Funds Into the Wrong Account

Sale proceeds must go into your NRO account in India. From NRO, repatriation to your foreign account is capped at USD 1 million per financial year with full documentation. If your property sale proceeds exceed this, or if you need the money quickly, planning the repatriation across financial years becomes important. NRIs who do not plan this end up with large sums stuck in India unnecessarily.

TDS on NRI Property Sale — Rates, Mechanism & Who Deducts

Who Deducts TDS?

The buyer is responsible for deducting TDS from the payment made to you. This is mandatory under Section 393(2) of the Income Tax Act 2025 (previously Section 195 of the 1961 Act). The buyer deducts TDS before paying you any instalment — advance, registration amount, or final payment. If the buyer fails to deduct, they become liable as the defaulting deductor. As the NRI seller, you should ensure your buyer is aware of this obligation and has obtained your PAN before executing any payment.

TDS Rates on NRI Property Sale

TDS Rate After Budget 2024 — Important Change

For properties sold on or after 23 July 2024, the LTCG rate was revised to 12.5% without indexation benefit (down from 20% with indexation that applied earlier). The holding period for LTCG was also reduced from 36 months to 24 months. If you purchased property before 23 July 2024, you can choose between the old regime (20% with indexation) and the new regime (12.5% without indexation) — whichever results in lower tax. A CA can compute both and advise which option benefits you in your specific case.

Budget 2026 Change — TAN Requirement Removed from 1 October 2026

Before Budget 2026, every resident Indian buying property from an NRI was required to obtain a Tax Deduction Account Number (TAN) — a separate registration from PAN used specifically for deducting and depositing TDS. For most individual buyers making a one-time property purchase, obtaining a TAN solely for this transaction was an unfamiliar and confusing process that frequently caused delays, errors, and hesitation.

Budget 2026 has removed this requirement. Effective 1 October 2026, resident buyers can deduct and deposit TDS using their existing PAN-based challan — the same mechanism used for purchasing property from resident sellers. The buyer's TDS obligation continues unchanged; only the reporting mechanism is simplified.

The practical benefit for NRI sellers: fewer buyers will hesitate, delay, or make errors in the TDS process. Faster TDS deposit means faster TDS credit in your Form 26AS, which means you can file your ITR and initiate the refund process sooner.

Lower Deduction Certificate (Form 13) — The Most Important Tool for NRI Sellers

If you do nothing else from this guide, do this: apply for a Lower Deduction Certificate before accepting any buyer offer.

What is a Lower Deduction Certificate?

A Lower Deduction Certificate (LDC) — applied through Form 13 on the TRACES portal — is an order from your Income Tax Assessing Officer directing the buyer to deduct TDS at a lower rate than the standard statutory rate. Instead of 12.5% (or 30%) on the full sale consideration, the buyer deducts TDS at the rate specified in the certificate — which can be as low as 3–5% or even nil if your actual tax liability is minimal after accounting for cost of acquisition, improvement, and exemptions.

Why It Matters — A Worked Example

How to Apply for Form 13 LDC

1. Login to TRACES portal (traces.gov.in) using your PAN and income tax e-filing credentials
2. Go to Statements / Forms → Form 13
3. Fill in details: property description, sale consideration, purchase cost, estimated capital gain, income tax computation, and DTAA details if applicable
4. Upload supporting documents: purchase deed, cost of acquisition evidence, proof of NRI status, PAN card
5. Submit — the application goes to your Assessing Officer (AO) for review
6. The AO may call for a hearing or additional documents before issuing the certificate

Capital Gains Tax — LTCG, STCG & Section 54 Exemption

Computing Your Capital Gain

Capital gain = Sale consideration received − Cost of acquisition − Cost of improvement − Transfer expenses (brokerage, stamp duty on purchase, registration costs)

For LTCG (property held over 24 months): You have a choice between two methods for sales after 23 July 2024 — 12.5% without indexation, or 20% with indexation. You should compute both and choose whichever gives you a lower tax liability. For properties purchased before 2001, the fair market value as on 1 April 2001 can be used as the cost.

For STCG (property held 24 months or less): The gain is taxed at your income tax slab rate — which for most NRIs with significant income is 30%. There is no concessional rate for short-term gains.

Section 54 Exemption — Reinvestment in Residential Property

Section 54 of the Income Tax Act allows you to claim full or partial exemption from LTCG if you reinvest the capital gains amount (not the full sale proceeds) into a residential property in India within the prescribed timeframe:

Filing ITR After Property Sale — Claiming Your TDS Refund

As an NRI who has sold property in India, you are required to file an Income Tax Return (ITR) in India for the year in which the sale occurred — regardless of whether your net tax liability after TDS credit is zero or results in a refund. There are several reasons this is non-negotiable:

• You cannot claim a TDS refund without filing ITR
• The Section 54 exemption (reinvestment) must be claimed in the ITR
• Capital gains from property sale are not covered by any exemption from ITR filing
• Failure to file can trigger scrutiny and penalty

Which ITR Form?

ITR-2 is the correct form for NRIs with capital gains from property sale, rental income, NRO interest, or other India-source income — provided you do not have business or professional income. If you have business income in India, use ITR-3. Do not use ITR-1 (Sahaj) — it is not applicable to NRIs.

DTAA Relief — Reducing Double Taxation

If you are taxed on the same property capital gain in both India and your country of residence (USA, UK, UAE, Singapore, etc.), India's DTAA with those countries allows you to avoid double taxation either by the exemption method or the tax credit method. To claim DTAA relief:

• Obtain a Tax Residency Certificate (TRC) from the tax authority of your country of residence
• File Form 10F online on the Indian income tax portal (can be filed even without Indian PAN from 2023)
• Submit TRC and Form 10F to the Indian deductor (buyer) before TDS is deducted — DTAA relief cannot be claimed retrospectively for TDS that has already been deducted at standard rates

Repatriation — Sending Sale Proceeds to Your Foreign Bank Account

The Routing Requirement

Sale proceeds from an NRI property sale must first be credited to your NRO (Non-Resident Ordinary) account in India. The buyer's payment — after TDS deduction — goes into your NRO account. From there, you initiate repatriation to your foreign bank account. You cannot bypass the NRO account, even if you have an NRE account — FEMA requires the NRO routing for Indian-source income.

Repatriation Limit — USD 1 Million Per Financial Year

Repatriation from your NRO account is capped at USD 1 million (approximately ₹8.5 crore) per financial year per individual. This limit covers the cumulative total of all remittances from all your NRO accounts. If your sale proceeds exceed this limit, you may need to stagger repatriation across two financial years. A married couple where both spouses are NRIs can collectively remit USD 2 million per year from their respective NRO accounts.

Form 15CA, 15CB — Now Form 145 and Form 146

Before your bank will process the international transfer of your sale proceeds, it will require two documents from you: a self-declaration and a CA certificate confirming Indian tax compliance. These were previously known as Form 15CA and Form 15CB — and are now renamed Form 145 and Form 146 respectively under the Income Tax Rules 2026 (effective 1 April 2026). The process and requirements are identical — only the form numbers have changed.

When Are These Forms Required?

For most NRI property sale repatriations above ₹5 lakh, your bank will require both Form 145 (15CA Part C) and Form 146 (15CB). For repatriations below ₹5 lakh, only Form 145 Part A is required without CA certification. In practice, property sale proceeds almost always exceed ₹5 lakh, so plan for both forms.

Documents Your CA Needs for Form 146

• Registered sale deed (copy)
• Original purchase deed (cost of acquisition evidence)
• Form 16B or TDS certificate from the buyer (confirming TDS deducted and deposited)
• Proof of NRI status (passport, visa, overseas address proof)
• Bank statement of NRO account showing receipt of sale proceeds
• Capital gains computation (prepared by CA)
• ITR acknowledgement for the year of sale (if already filed)
• Form 10F and Tax Residency Certificate (if claiming DTAA relief)

Complete Step-by-Step Checklist — NRI Property Sale in India

Phase 1: Before Accepting a Buyer Offer

• ☑ Verify your NRI status under both Income Tax Act and FEMA (the definitions differ — FEMA uses 182-day test, IT Act has multiple tests)
• ☑ Locate the original purchase deed and cost documentation — cost of acquisition, improvement invoices, stamp duty receipts
• ☑ Compute estimated capital gain and tax liability — engage a CA to determine LTCG vs STCG and which computation method (12.5% without indexation or 20% with indexation) is beneficial
• ☑ Assess Section 54 exemption availability — are you reinvesting in another residential property or Section 54EC bonds?
• ☑ Apply for Lower Deduction Certificate (Form 13) on TRACES portal — allow 45–60 days for processing
• ☑ Obtain Tax Residency Certificate (TRC) from your country of residence if you intend to claim DTAA relief
• ☑ File Form 10F online on the Indian income tax portal

Phase 2: Sale Agreement & Registration

• ☑ Ensure your PAN is correct and linked to your Aadhaar (NRIs are exempt from Aadhaar linking but must have a valid PAN)
• ☑ Confirm buyer is aware of TDS deduction obligation under Section 393(2)
• ☑ If LDC has been obtained, provide the certificate to the buyer before any payment is made
• ☑ Ensure sale proceeds (after TDS deduction) are directed to your NRO account — not a resident savings account
• ☑ Collect Form 16B / TDS certificate from buyer within 15 days of TDS deposit
• ☑ Verify TDS credit appears in your Form 26AS on the income tax portal

Phase 3: Tax Filing

• ☑ File ITR-2 for the financial year in which the sale occurred — due date is 31 July of the assessment year (unless extended by CBDT)
• ☑ Declare capital gain in Schedule CG of ITR-2
• ☑ Claim Section 54 exemption in Schedule CG if reinvesting
• ☑ If reinvesting in property but construction not complete by ITR due date — deposit balance gain in Capital Gains Account Scheme (CGAS) before filing
• ☑ Claim TDS credit in Schedule TDS of ITR-2 — excess TDS becomes a refund
• ☑ Pre-validate your NRO bank account on the income tax portal for refund credit

Phase 4: Repatriation

• ☑ Engage CA to prepare Form 146 (15CB) — provide all documents listed above
• ☑ File Form 145 (15CA) Part C on income tax portal after obtaining CA's Form 146 acknowledgement number
• ☑ Submit Form A2 (FEMA remittance application) to your NRO account bank, along with Forms 145 and 146, sale deed, and supporting documents
• ☑ Bank processes international transfer via SWIFT — typically 2–7 working days after document approval
• ☑ Ensure total NRO repatriation for the financial year does not exceed USD 1 million
• ☑ If proceeds exceed USD 1 million, plan second tranche for next financial year (starting 1 April)