Selling Indian Property as an NRI: The End-to-End Process

Most guides to selling property as a Non-Resident Indian (NRI) were written for a rulebook that no longer exists. In the last two years, the tax on the gain changed, the section numbers that govern the withholding changed, and from October 2026 the paperwork the buyer has to file changes too. None of that shows up in a search unless you specifically ask what changed and when, which most sellers do not think to do until their bank or their buyer's lawyer asks a question they cannot answer.

Three things, in order of how often sellers get caught out by them.

First, capital gains. For any sale of immovable property completed on or after 23 July 2024, the gain is taxed at a flat 12.5%, with no adjustment for inflation over the holding period. The older method, a 20% rate applied to the gain after adjusting the purchase price for inflation, no longer applies to a sale happening today. If you bought the property years ago, the difference between the two methods can be large, so do not let anyone estimate your liability using the old formula.

Second, the law that sets the withholding rate on your sale price changed its own name. The Income Tax Act 2025 replaced the Income Tax Act, 1961, effective 1 April 2026. What used to be Section 195, the provision requiring the buyer to withhold tax before paying a non-resident seller, is now Section 393(2) of the new Act. The rate and the underlying logic are unchanged, but any adviser, buyer or article still citing "Section 195" is describing the old Act, not the one in force at your closing.

Third, and specific to transactions from 1 October 2026 onward: an individual or a Hindu Undivided Family (HUF) buying property from an NRI will no longer need a Tax Deduction and Collection Account Number (TAN) to deposit the tax withheld from your sale proceeds. A Permanent Account Number (PAN) and a challan will do. If your buyer is a company, a partnership or an LLP, this relief does not apply to them and they still need a TAN. This is a compliance simplification for the buyer, not a change to what you owe, but it is worth knowing so you are not the one explaining an outdated requirement to a buyer's lawyer.

The Foreign Exchange Management Act, 1999 (FEMA) and the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 decide how much of your sale proceeds can leave India, and the answer depends on how the property was originally funded, not on how much you are selling it for.

If you bought the property using foreign exchange, meaning funds remitted from abroad or held in a Foreign Currency Non-Resident (FCNR) or Non-Resident External (NRE) account, you can repatriate the full sale proceeds, net of tax. That right is capped, however, at two residential properties over your lifetime; proceeds from a third such property fall under the general limit described below.

If the property was inherited, or bought using rupee funds from a Non-Resident Ordinary (NRO) account, repatriation is capped at USD 1 million per financial year, and you will need to produce documentary evidence of how you acquired the asset, plus clearance from the income tax authorities, before your bank will move the money. Anything above that annual figure needs specific Reserve Bank of India (RBI) approval, granted case by case, and is not something to assume you will get.

This is worth working out before you agree a sale price, not after, because the two paths have different documentation timelines and a seller who discovers the USD 1 million cap after signing has a much weaker negotiating position than one who knew about it going in. If the property came to you through inheritance, read Inheritance and Succession of Indian Property for NRIs first. If you are still working out whether you count as an NRI for these purposes at all, Who counts as an NRI, OCI or PIO for property purposes settles that question.

A holding period beyond 24 months makes this a long-term capital gain, taxed at the flat 12.5% described above. Sell before that and it is a short-term gain, added to your total Indian income and taxed at your applicable slab rate, which for most NRI sellers is a materially worse outcome.

The complication is that the buyer's withholding obligation is not calculated on your gain, it is calculated, in practice, on the full sale price, because the buyer has no independent way to verify your cost of acquisition or the improvements you have made since. Sellers routinely see 20 to 30% of the total sale value withheld at the time of registration, even when the actual tax owed on the gain is a fraction of that, because the buyer is deducting against the transaction value out of caution rather than against your net liability. That gap is refundable when you file your return, but it can tie up a large sum for the better part of a year. Capital Gains Tax on Selling Land in India: The Complete Guide and TDS on Property Purchase: When and How Much work through the calculation in full; this is the summary you need before deciding what to do next.

There is a way to close that gap before closing, not after. Under Section 197 of the Income Tax Act, using Form 13, you can apply to your assessing officer for a certificate authorising the buyer to withhold at a lower rate, one that reflects your actual computed gain rather than the full sale price. Approved certificates commonly bring the withholding down to somewhere in the region of 1 to 3% of the sale price, instead of 20% or more.

The trade-off is time. This has to be filed and approved before the sale closes, and processing is not instant, so it needs to start well before you have a signed agreement, not after. Lower TDS Certificate: Form 13 for NRI Sellers covers the application itself. The decision to make now is whether your timeline allows for it; if a buyer wants to close in three weeks, this option is probably already off the table.

If your closing falls on or after 1 October 2026 and your buyer is an individual or an HUF, they will deposit the tax withheld from your proceeds using their own PAN and a challan, rather than first applying for a TAN. Before that date, and for any buyer that is a company, a partnership firm or a Limited Liability Partnership (LLP) regardless of date, the TAN requirement and the quarterly filing that comes with it still apply.

This matters to you mainly as a timing and credibility check. A buyer's lawyer who insists on a TAN application for a straightforward individual purchase after October 2026 is working from outdated guidance, and a buyer who has never heard of the change is not necessarily a problem, but is a signal to confirm they have engaged someone who has done this before. If your buyer needed a Power of Attorney to transact on your behalf during any part of this process, Power of Attorney for Overseas Buyers, Done Safely covers how to set that up without creating a separate risk.

Once tax is withheld and the sale is registered, moving the balance abroad has its own paperwork, separate from the tax filing. Any remittance from an NRO account above five lakh rupees that is taxable requires Form 15CA (an online self-declaration by the person remitting the funds) and Form 15CB (a certificate from a practising chartered accountant confirming the nature of the remittance and that the applicable tax has been dealt with). Below that threshold, a simpler declaration suffices.

Your bank, acting as the authorised dealer, will not move the money without both forms in place where they are required, and without evidence that you have stayed inside the USD 1 million annual cap described in Step 1, if that is the path you are on. If you funded the original purchase with money sent from abroad and are repatriating the full proceeds under the two-property route instead, keep the original inward remittance records; the bank will ask for them. Funding Your Purchase: Legal Channels to Send Money Home explains the same corridor from the other direction, which is a useful cross-check on what your bank will expect to see.

Be honest with yourself about three friction points before you list. Inherited property takes longer to clear for repatriation than property you bought yourself, because the documentary trail has to prove not just the sale but how you came to own the asset in the first place; build extra weeks into your timeline, not days. A lower withholding certificate, if you want one, has to be started before you have a buyer, which means deciding on it while you are still pricing the property, not after an offer arrives. And the tax withheld at registration will very likely exceed what you actually owe, so plan your cash flow around getting that money back through a subsequent tax return, not around receiving your full net proceeds at closing.

None of this is a reason to avoid selling. It is a reason to sequence the paperwork ahead of the transaction rather than behind it, which is the one thing every seller who has an easy closing has in common with every seller who does not.

Before any of this, confirm the property itself is clean to sell. A buyer's lawyer will want a documented chain of title and, if a Power of Attorney was used at any point in the property's history, proof it was validly executed; The NRI Documentation Checklist for Buying Land lists what that file should contain, and it does not change because you are the one selling rather than buying. If you are weighing where any proceeds you keep in India might go next, the destination guides for Goa, Alibaug and Karjat cover the markets Avacasa lists in.

• Finance (No. 2) Act, 2024: removal of indexation on long-term capital gains from immovable property, effective transfers on or after 23 July 2024
• Income-tax Act, 2025: replaces the Income-tax Act, 1961, effective 1 April 2026; Section 195 superseded by Section 393(2)
• Finance Bill, 2026: PAN-based challan for TDS on property purchased from a non-resident by an individual or HUF buyer, effective 1 October 2026
• Reserve Bank of India, Master Direction on Acquisition and Transfer of Immovable Property in India: repatriation limits, the two-property condition and the USD 1 million per financial year scheme
• Foreign Exchange Management (Non-Debt Instruments) Rules, 2019