Selling property in India: TDS and repatriation

Selling a flat or plot in India while living abroad involves three things that resident sellers do not face in the same way: the buyer must deduct tax at source on the full payment to you, your sale proceeds land in an Indian account with limits on sending them abroad, and the bank will want tax paperwork before it remits. Planning these before you sign an agreement can save months.

Who you can sell to

Under the RBI's Master Direction on immovable property, an NRI or OCI cardholder can sell property in India to a person resident in India, or to another NRI or OCI (except agricultural land, plantation property or farmhouses, which can go only to residents). The transaction must go through banking channels.

Tax deducted at source: the buyer's job, your cost

When the seller is a non-resident, the buyer must deduct tax at source from the payment. Unlike the 1% TDS that applies when a resident sells, the non-resident rate is based on the capital gains rate, for example 12.5% plus surcharge and cess for long-term capital gains, and it is usually applied on the whole sale price, not just your gain, unless a lower-deduction certificate is obtained.

From 1 April 2026 the Income-tax Act, 2025 replaced the Income-tax Act, 1961. Professional commentary indicates that TDS on payments to non-residents now sits under section 393(2) of the new Act (formerly section 195), and that lower or nil deduction certificates are applied for under section 395 (formerly section 197) [to verify on incometax.gov.in]. If you have no PAN, a higher rate can apply.

What this means for you:

• Get a PAN well before the sale, if you do not already have one.
• Consider a lower deduction certificate. If your actual gain is much smaller than the sale price, apply to the Income Tax Department for a certificate so the buyer deducts tax only on the estimated tax due. This takes time; apply as soon as a buyer is agreed.
• Make sure the buyer deposits the TDS and issues the certificate (Form 16A or its successor), so the credit shows against your PAN.
• File an Indian tax return for the year of sale to report the gain, claim exemptions you qualify for, and get a refund of any excess TDS.

Long-term or short-term depends on how long you held the property. Reinvestment exemptions may reduce tax if you buy another residential property in India or invest in specified bonds, subject to conditions.

Getting the money out: repatriation

The sale proceeds should be credited to your NRO account. How much you can send abroad depends on how you bought the property:

• If you bought it with foreign exchange remitted through banking channels, or from NRE or FCNR(B) funds, or with a housing loan repaid from those sources, the RBI allows repatriation of the sale proceeds, up to the amount paid in foreign exchange, for up to two residential properties. Commercial property and plots are not subject to the two-property cap under this route.
• Otherwise, including inherited property or property paid for from Indian income, you can remit from your NRO account under the facility of up to USD 1 million per financial year, covering all NRO balances, after tax is paid.

Keep the bank advices of every remittance used to buy the property and pay the EMIs. Without them, your bank may treat the proceeds as non-repatriable and limit you to the USD 1 million route.

The bank's paperwork

Before remitting abroad, your bank will usually ask for:

• an online Form 15CA filed on the income tax portal by you or your representative
• a chartered accountant's Form 15CB, certifying that tax has been paid or deducted [to verify whether form numbers change under the Income-tax Act 2025]
• the sale deed, purchase documents and proof of the original foreign exchange payments
• the TDS certificate, and the lender's closure letter if there was a loan

If the property has a loan

The lender holds a charge over the property. The outstanding loan must be repaid, usually from the sale proceeds at the time of registration, and the lender must release the original title documents and issue a no-dues certificate before the buyer can take clean title.

Selling through a power of attorney

If you will not be in India, a registered, adjudicated power of attorney can let a trusted person sign and register the sale for you. Buyers' lenders scrutinise POAs closely, so use a specific POA. See our power of attorney guide.

This is general information, not legal or tax advice. Tax rates, section numbers and forms changed with the Income-tax Act, 2025; take advice from a chartered accountant before you sell.