Selling Property in India: Tax and Repatriation Rules for NRIs
NRIs selling property in India must navigate complex tax and repatriation rules. This guide covers capital gains, double taxation relief, and repatriation procedures in the US, UK, and Singapore.
NriPropertyCapital GainsRepatriationTaxReal Estate NewsNov 02, 2025
Pradeep Seth, 38, an NRI living in the US, sold a property in India for ₹1 crore that he had purchased in 2012 for ₹20 lakh. Treated as a long-term capital asset, its indexed cost of acquisition was ₹36.3 lakh. This led to a long-term capital gain of ₹63.7 lakh. The applicable capital gains tax in India, computed at 20% plus 4% cess, amounted to about ₹13.25 lakh. As the property value exceeded ₹50 lakh, the buyer was required to deduct TDS (Tax Deducted at Source) on the transaction, and an additional 1% TCS (Tax Collected at Source) was also collected at the time of sale.
After filing his Indian income tax return and claiming credit for the TDS and TCS, the NRI received a small refund, leaving net proceeds of approximately ₹86.76 lakh available for repatriation to his US account. For US tax purposes, the capital gain also had to be reported, as the US taxes the global income of its residents. The applicable long-term capital gains tax in the US could have been around 15% plus 3.8% Net Investment Income Tax (NIIT). However, the Foreign Tax Credit for taxes paid in India fully offset his US tax liability.
Ultimately, after accounting for capital gains tax, TDS, TCS, and double taxation relief, Pradeep’s effective global tax burden on the long-term capital gain remained around 20%.
Capital Gains and Repatriation Tax in the US, UK, and Singapore
When you sell a property in India, you have to pay the taxes here. “You file your income tax return, claim credit for that TDS, and pay or receive a refund based on your actual tax liability,” says Vivek Jalan, partner, Tax Connect Advisory Services.
Taxes also apply when you repatriate the amount you get after selling the property abroad. “All citizens and green card holders of the United States must report their worldwide income, including income from the sale of properties located outside the US, in their tax returns filed with the IRS (Internal Revenue Service),” says Pallav Pradyumn Narang, Partner, CNK, a chartered accountancy firm.
The UK taxes residents on worldwide income. Until April 5, 2025, non-domiciled individuals could opt to pay tax only on income actually repatriated into the UK under the remittance basis. “From April 6, 2025, this regime has been replaced by the four-year Foreign Income & Gains (FIG) regime, under which qualifying new residents (who were non-resident for at least ten years) can receive relief on foreign income and gains for four tax years; thereafter, income is taxed on the arising basis,” says Narang.
Singapore generally does not tax capital gains from the sale of property. However, if the tax authorities view the individual as trading in properties (for example, frequent buying and selling with profit intent), such gains may be treated as business income and taxed accordingly.
NRIs must remember that they are allowed to repatriate up to $1 million per financial year, compared to the $250,000 limit applicable to residents under the Liberalised Remittance Scheme (LRS).
DTAA Essentials Every NRI Should Know Before Selling Property in India
The role of the Double Taxation Avoidance Agreement (DTAA) is critical in this context. India has a DTAA agreement with the US, UK, and Singapore. “Under most DTAAs, gains from immovable property may be taxed in the country where the property is situated, while the resident country may also tax such gains but usually allows a foreign tax credit for the tax paid abroad. Therefore, it is essential to study the relevant DTAA between the two jurisdictions before any transaction for effective tax planning,” says Narang.
For example, in case the country of residence imposes a tax of 15% on the capital gains accruing on the sale of immovable property, the fact that taxes have already been paid in India at the rate of 12.5% shall be taken into account, and the NRI shall have to pay tax only at the rate of 2.5%.
Repatriating Property Sale Proceeds: Key Rules and Compliance for NRIs
Repatriation of funds shall depend on the Indian foreign exchange regulations. Purely from a tax perspective, it is not necessary for the NRI to repatriate the entire proceeds. “However, in case the NRI intends to repatriate the sale proceeds, it would be advisable to do so in compliance with Indian foreign exchange and tax regulations,” says Patnaik.
For example, the buyer is required to withhold tax on the capital gains accruing to the non-resident NRI, and the remittance could take place on the basis of appropriate documentary evidence, including the sale deed of the immovable property and additional documents like Form 15CA (from the buyer) and 15CB (from a CA evidencing the taxes paid in India).
The buyer may be asked to share a copy of the withholding tax certificate as soon as it becomes available. “These documents would help the NRI seller to substantiate the basis of capital gains and the capital gains tax paid by him/her in India,” says Patnaik.
Frequently Asked Questions
What is the capital gains tax rate in India for NRIs selling property?
The capital gains tax rate in India for NRIs selling property is 20% plus 4% cess on long-term capital gains. For short-term capital gains, the tax rate is 15% plus 4% cess.
What is the Foreign Tax Credit (FTC) and how does it apply to NRIs selling property in India?
The Foreign Tax Credit (FTC) allows NRIs to claim a credit for taxes paid in India against their tax liability in their country of residence, thereby avoiding double taxation.
What is the repatriation limit for NRIs under the Liberalised Remittance Scheme (LRS)?
NRIs are allowed to repatriate up to $1 million per financial year under the Liberalised Remittance Scheme (LRS).
What documents are required for repatriating property sale proceeds?
NRIs need to provide the sale deed, Form 15CA (from the buyer), Form 15CB (from a CA evidencing the taxes paid in India), and a withholding tax certificate from the buyer to repatriate property sale proceeds.
How does the DTAA (Double Taxation Avoidance Agreement) benefit NRIs selling property in India?
The DTAA allows NRIs to claim a foreign tax credit for taxes paid in India, thereby reducing their tax liability in their country of residence and avoiding double taxation.
Related News Articles
Family Offices in India: Embracing Diversification and Global Opportunities
Family offices in India are shifting from traditional investments, seeking higher returns and diversifying their portfolios, with a focus on real estate, healthcare, and finance.
Nemetschek Group Sets Sights on Dominating India's AEC Market
The Nemetschek Group, a global leader in AEC software solutions, targets 15-20% market share in India within three years, leveraging innovative solutions and ethical AI practices.
Mumbai Metro Extension: Who Foots the Bill?
The Mumbai Metro extension project has sparked a debate between the BMC and MMRDA over who will bear the costs, impacting real estate and property prices.
India's Housing Market Poised for Growth as Affordability Improves by 2025
India's residential real estate market is expected to see enhanced affordability levels by 2025, driven by anticipated interest rate cuts from the Reserve Bank of India (RBI). While cities like Kolkata and Pune will remain highly affordable, others such a
Savills India Records Unprecedented Office Space Absorption of 75.2 Million Sq-Feet in 2024
Savills India has reported an unprecedented absorption of 75.2 million square feet in the office market in 2024, marking a significant milestone in the real estate sector. This growth is driven by the tech sector, urbanization, and an increase in demand f
2025: A Year of Promise for the Indian Real Estate Market
The Indian real estate sector continues its robust growth in 2025, driven by a surge in the luxury segment and emerging trends in peripheral metro city markets.