What’s in scope
Capital gains arise when an NRI sells a capital asset situated in India. “Property” here means residential / commercial real estate (land, building, flat). The treatment depends on holding period:
- Long-term (held > 24 months) — LTCG taxed at 12.5% (post Finance Act 2024) without indexation; or 20% with indexation if the property was acquired before 23 July 2024 (taxpayer can pick lower).
- Short-term (held ≤ 24 months) — STCG taxed at slab rates (effectively 30%+ for most NRIs).
Inherited property: the period of holding includes the original owner’s holding period; the cost of acquisition is the original owner’s cost (or fair market value as on 1 April 2001 if acquired before that date).
Who needs this advisory
NRIs selling self-acquired or inherited Indian property — whether to fund a new residence overseas, to liquidate a legacy holding, or as part of estate-settlement decisions. The same advisory applies when an NRI gifts property (treated as transfer in some cases) or transfers between family members.
Governing provisions
The relevant provisions:
- Sections 45 & 48 — capital gains computation rules.
- Section 49 — cost of acquisition for inherited / gifted property.
- Section 54 — exemption on LTCG from sale of residential property if reinvested in another residential property in India.
- Section 54F — exemption on LTCG from any other long-term asset reinvested in residential property.
- Section 54EC — LTCG exemption (up to ₹50 lakh) on investment in NHAI / REC bonds within 6 months.
- Section 195 — TDS by buyer at LTCG / STCG rates plus surcharge and cess.
- FEMA Notification 21(R)/2018 — repatriation of sale proceeds.
How we handle NRI capital gains
- Pre-sale modelling — we project the LTCG / STCG, exemption eligibility, TDS obligation and net repatriable amount.
- Lower deduction certificate (Form 13) — we file with the AO so the buyer withholds at the actual LTCG rate (typically 12.5%) instead of the higher default rate.
- Section 54 / 54F / 54EC structuring — we time the reinvestment, set up the Capital Gains Account Scheme deposit if needed, and document compliance.
- Buyer coordination — we work with the buyer’s CA to issue Form 16A and the TDS challan reflecting the certificate.
- FEMA repatriation — Form 15CA / 15CB on the post-tax sale proceeds, USD 1 million scheme aggregation.
- Annual ITR — we file the return claiming the exemption and reconciling TDS.
Documents we’ll ask for
- Sale agreement / draft sale deed.
- Original purchase documents — sale deed, allotment letter, payment receipts.
- For inherited property — will, succession certificate, prior owner’s purchase documents.
- Property tax receipts, society NOC, encumbrance certificate.
- Capital expenditure proofs — for cost of improvement claims.
- Buyer’s PAN and TAN.
- NRI’s PAN, passport, visa, address proof.
- Reinvestment plan — if claiming Section 54 / 54F.
How long it takes and what it costs
Lower-deduction certificate processing typically takes 30–45 working days; we file 8–10 weeks ahead of the expected sale to avoid TDS surprise. End-to-end transaction support — including the certificate, sale-deed signing coordination, repatriation and ITR — is offered as a fixed-fee bundle. We share an indicative quote on the discovery call once the property value and seller cost basis are known.
Frequently asked questions
Can the indexation benefit still be claimed for property sold after 23 July 2024?
Resident sellers can pick the lower of 20% with indexation or 12.5% without, where the property was acquired before 23 July 2024. The indexation option is not available to NRIs — LTCG is at 12.5% flat, but Section 54 / 54F exemptions remain.
Can Section 54 reinvestment be made in property outside India?
No. The reinvestment must be in residential property in India. Foreign property does not qualify.
What’s the difference between Section 54 and Section 54F?
Section 54 applies when both the asset sold and the asset bought are residential property. Section 54F applies when the asset sold is any other long-term asset (e.g., shares, gold, commercial property) but the reinvestment is into residential property — with stricter conditions on owning other residential property.
Is the buyer’s TDS treated as final tax?
No. TDS is an advance against the seller’s eventual liability. The seller files an ITR claiming the actual gain and the TDS already paid; refund or shortfall is settled at filing.
Talk to a partner.
A 30-minute call with a partner — no deck, no follow-up email blasts. Just a read on whether we’re the right team to handle your NRI property sale.