17 Sep 2026
10 min read
Raja
⚡ Quick Answer: What Does an NRI Pay on Selling Indian Property?
Long-term gains — property held over 24 months — are taxed at 12.5% without indexation. Short-term gains are taxed at your slab rate. But the buyer must deduct TDS on the FULL SALE VALUE, not your gain, so far more is withheld than you owe.
Two fixes: apply for a lower deduction certificate (Form 128) before completion so the buyer deducts on the real gain; or reinvest the gain in a residential property under Section 54, which can reduce the tax to nil. Both must be set up before you sell, not after.
Selling property in India as an NRI costs more than most sellers expect, and for a reason that surprises almost everyone: the tax deducted at the point of sale is calculated on the whole sale price, not on your profit. On an ₹80 lakh sale where you made ₹30 lakh, roughly ₹10 lakh can be withheld rather than the ₹3.75 lakh actually due.
That money is recoverable, but only after you file a return — which can be a year later. There are two lawful ways to avoid the gap in the first place, and one of them can remove the tax bill altogether rather than just reduce the withholding.
This guide covers what you actually owe, why the withholding works the way it does, the certificate that fixes it, and how reinvestment relief works if you intend to buy again in India.
TABLE OF CONTENTS
Capital Gains Rate by Holding Period
| Holding period | Classification | Tax rate |
|---|---|---|
| More than 24 months | Long-term capital gain | 12.5% plus surcharge and cess, without indexation |
| 24 months or less | Short-term capital gain | Your applicable slab rate, plus surcharge and cess |
The rate changed on 23 July 2024, and this is where a great deal of published guidance is still wrong. Before that date, long-term property gains were taxed at 20% with the benefit of indexation — adjusting your purchase cost for inflation, which on an older property made a substantial difference.
When the rate dropped to 12.5%, indexation went with it. There was then a partial rollback allowing a choice between the two methods for property acquired before 23 July 2024 — and that choice was extended to resident individuals and HUFs only.
The point most NRI sellers are not told
Non-residents were excluded from the indexation rollback. As an NRI you pay 12.5% without indexation, regardless of when you bought the property.
If a calculator or an adviser offers you the 20%-with-indexation route, it does not apply to you. On a property bought twenty years ago, that difference is not small.
Your gain is the sale consideration less your acquisition cost, less the cost of any capital improvements and the expenses of transfer. The rates sit in the Income-tax Act, 2025 — the governing legislation since it replaced the 1961 Act on 1 April 2026. That was a renumbering and consolidation exercise rather than a change to what you owe, but it means section and form numbers you may have been quoted have changed. Check any reference against the department's official 1961-to-2025 mapping utility.
What Gets Withheld on an ₹80 Lakh Sale
| Amount | |
|---|---|
| Sale price | ₹80,00,000 |
| Your original purchase cost | ₹50,00,000 |
| Your actual gain | ₹30,00,000 |
| Tax genuinely due at 12.5% on the gain | approx. ₹3,75,000 |
| TDS the buyer must deduct — 12.5% of the full ₹80,00,000 | approx. ₹10,00,000 |
| Cash withheld beyond what you owe | approx. ₹6,25,000 |
Illustrative figures. The real deduction is higher, because surcharge and cess are added on top.
You recover the excess only by filing an Indian return for that year and claiming a refund, through the Income Tax Department e-filing portal. Depending on when in the financial year you sell, that money can be out of reach for close to eighteen months.
One piece of good news. Until 30 September 2026 a buyer purchasing from an NRI had to obtain a TAN and file quarterly returns, which put some buyers off NRI-owned property altogether. From 1 October 2026 a resident individual or HUF buyer can deposit the TDS with a simple PAN-based challan instead. We cover the mechanics from the buyer's side in our guide for buyers purchasing from an NRI seller — worth sending to your buyer if they raise it as an objection.
In the example above, that is the difference between ₹10 lakh withheld and roughly ₹3.75 lakh withheld. The same tax — but ₹6 lakh that stays with you instead of sitting with the government for a year.
Three things sellers get wrong about this certificate
Applications are submitted online through TRACES — the Income Tax Department's TDS Reconciliation Analysis and Correction Enabling System — and routed to your jurisdictional Assessing Officer, who processes them faceless. This is worth paying a chartered accountant to handle: the computation has to be supportable, and a weak application is refused.
First, the name. Almost everything published on this still calls it Form 13.
Since 1 April 2026 the application is Form 128, made under Section 395 of the Income-tax Act 2025 and Rule 213 of the Income-tax Rules 2026. Form 13 and Section 197 were the references under the 1961 Act.
If your chartered accountant or an online guide says Form 13, they mean the same thing — but the form you or they actually file now is Form 128.
If you sold something other than a house
Section 54 applies when you sell a residential property. If what you sold was a different kind of long-term asset — bare land, commercial premises, shares — the relevant relief is Section 54F instead, and it works differently in one important way: you must reinvest the whole net consideration, not just the gain. Reinvest only part and the exemption is reduced proportionately.
Section 54 Conditions at a Glance
| Condition | Requirement |
|---|---|
| What you sold | A residential property held more than 24 months |
| What you reinvest | The capital gain (not the whole sale price) |
| Timing — to buy | Within 1 year before, or 2 years after, the date of sale |
| Timing — to build | Construction completed within 3 years of the sale |
| Maximum exemption | ₹10 crore, a ceiling in place since April 2024 |
| Two properties | Permitted where the gain is under ₹2 crore — available once in a lifetime |
| Lock-in on the new property | Sell it within 3 years and the exemption is withdrawn; the gain is then taxed as short-term |
Where Infrastride fits into this is straightforward, and we would rather state it plainly than imply it. If you are selling an Indian property and intend to reinvest in a residential property to claim Section 54 relief, OPAL by Infrastride is a DTCP-approved freehold villa community at Kariyampalayam on the Sathy Road corridor in Coimbatore, with 2BHK and 3BHK G+1 homes. A completed villa satisfies the "purchase" route within the two-year window; a plot with construction satisfies the "build" route within three years. Which of those suits you is a question for your chartered accountant and your timeline, not for us.
Before you rely on Section 54 in your planning, read what a villa in Coimbatore actually costs end to end — including registration, stamp duty and the charges beyond the headline price. Reinvestment relief is calculated on what you spend on the property, and knowing the full number early prevents an under-invested claim.
The distinction that catches plot buyers
Section 54 relief requires a residential house at the end of it — not simply land.
Buy a plot and build a house on it within three years: qualifies.
Buy a plot and leave it as land: does not.
If you are reinvesting into a plot, the construction timeline is part of the tax planning, not a separate decision you can take later.
The bonds alternative
If you do not intend to buy property again, there is a separate route. Gains from the sale of land or a building can be invested in specified government-backed bonds — NHAI, REC, PFC or IRFC are the usual issuers — within six months of the transfer. The limits are tighter: a maximum of ₹50 lakh in a financial year, with a five-year lock-in. Sell or transfer the bonds inside that period and the exemption is withdrawn.
This is commonly called the Section 54EC route. Note that the provision has been renumbered under the 2025 Act, so confirm the current reference with your chartered accountant before citing it in any filing.
The CGAS deadline that trips people up
The deposit must be made by the due date for filing your return under the relevant provision — not by the date you actually file.
If the due date is 31 July and you file late in August, the deposit still had to be in the account by 31 July. Filing late does not extend the deposit window, and missing it forfeits the relief on the undeposited amount.
NRIs can open only an NRO capital gains account.
Repatriation Limits by Funding Source
| How you funded the purchase | What you can repatriate |
|---|---|
| Foreign currency — inward remittance, NRE or FCNR funds | The full sale proceeds, but for residential property this is limited to two properties in a lifetime. From the third onwards, the USD 1 million route applies. |
| Rupee funds — an NRO account | Up to USD 1 million per financial year, regardless of how many properties |
| Above those limits | Requires RBI approval |
Sale proceeds are credited to your NRO account first in either case. Repatriation from there requires a chartered accountant's certification — Form 15CB — and the accompanying declaration in Form 15CA.
The authority here is the Reserve Bank, not the Income Tax Department. Its FAQ on purchase of immovable property sets out the repatriation position for NRIs, including the two-property limit on residential property, with the underlying rule references. Its separate FAQ on remittance of assets covers the USD 1 million route out of an NRO account and the cases needing prior RBI approval. If your funding history is mixed — part foreign remittance, part rupee funds — establish which limit applies to which portion before you commit to a timeline for moving the money.
If you are selling in order to buy again in India, the account routing matters at both ends. We set out how the NRE and NRO routes work on a purchase in our guide to buying property in India remotely.
Why it belongs in this article
A historic disclosure gap has a habit of appearing exactly when a chartered accountant is certifying your Form 15CB. If there is any doubt about past filings, raise it now — the window closes on 31 December 2026 and will not be extended.
This article is general information from a property developer, not tax advice. We build homes; we are not chartered accountants. Tax and FEMA rules change, and their application depends on your residential status, treaty position, funding history and individual circumstances. Every figure here is illustrative. Confirm your own position with a qualified chartered accountant before acting — particularly on Section 54, where a missed condition costs you the whole relief.
Long-term gains on property held more than 24 months are taxed at 12.5% plus surcharge and cess, without indexation. Short-term gains, on property held 24 months or less, are taxed at your applicable slab rate. The rate has been 12.5% since 23 July 2024.
No. When the partial rollback allowed a choice between 20% with indexation and 12.5% without for property acquired before 23 July 2024, that choice was extended to resident individuals and HUFs only. Non-residents pay 12.5% without indexation regardless of when the property was purchased.
Because where the seller is a non-resident, the law requires the buyer to deduct on the entire sale consideration rather than the computed gain. The excess is recoverable only when you file your return. You can avoid it by obtaining a lower deduction certificate — Form 128, formerly Form 13 — from the Assessing Officer before the sale completes.
Yes, on the same conditions as a resident. Reinvest the gain from a residential property held over 24 months into another residential property in India — purchased within one year before or two years after the sale, or constructed within three years — and the gain is exempt up to ₹10 crore. Sell the new property within three years and the exemption is withdrawn.
Only if you build a residential house on it, and complete construction within three years of the sale. Buying land and leaving it as land does not qualify. If you are reinvesting into a plot, the construction timeline is part of the tax planning rather than a later decision.
It depends how you funded the purchase. If you bought with foreign currency through inward remittance, NRE or FCNR funds, the full proceeds are repatriable — but for residential property that is limited to two properties in a lifetime, after which the USD 1 million per financial year route applies. If you bought with rupee funds through an NRO account, the limit is USD 1 million per financial year. Above those limits, RBI approval is required.
It lets you park an unutilised gain at a bank so it counts as reinvested for the purposes of your return, while you take the two or three years Section 54 allows to buy or build. The deposit must be made by the statutory due date for filing your return, not the date you actually file. NRIs can open only an NRO capital gains account.
Our project team will walk you through freehold titles, DTCP layout, TNRERA registration, and the community master plan. Visit infrastride.in or call to schedule.
Book Your Site Visit at OPAL by Infrastride — Kariyampalayam
If the person selling you a property is a non-resident, the tax obligation is yours. You calculate the deduction, withhold it before paying, deposit it with the government and issue the seller a certificate. Miss a step and the shortfall — plus interest — is recovered from you, not from them. For years that has been heavy enough to break deals. Buying from a resident seller means one online form. Buying from an NRI has meant registering for a TAN and filing quarterly returns, for a single house purchase. That changes on 1 October 2026, and this guide covers what to deduct, on what amount, which form to file, and what the new rule means if you are buying in Coimbatore.
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