By Arosh John | Thane’s Trusted NRI Property Transaction Specialist
Founder – John Real Estate | Editor – Thanerealestatenews.com
Selling property in India as an NRI comes with tax implications that can catch even the most informed sellers off guard. Post the Union Budget 2024, significant changes were introduced—particularly a shift to a flat 12.5% LTCG regime and a new tiered TDS structure based on sale value.
While these reforms simplify taxation in theory, many NRIs still lose lakhs in excess TDS—primarily due to poor planning and lack of professional guidance.
Here’s a simplified guide to help you understand the new structure and legally reduce your upfront TDS liability.
Revised TDS Rates on Long-Term Capital Gains (FY 2025-26)
If you’re selling a property held for more than 24 months, it qualifies as a long-term capital asset.
The tax regime now levies a flat 12.5% LTCG rate (without indexation). However, effective TDS rates vary by the total transaction value due to surcharge and cess:
| Sale Value (₹) | Base LTCG | Surcharge | Cess (4%) | Effective TDS Rate |
|---|---|---|---|---|
| Up to ₹50 Lakh | 12.5% | Nil | 4% | 13.00% |
| ₹50 L – ₹1 Cr | 12.5% | 10% | 4% | 14.30% (approx.) |
| ₹1 Cr – ₹2 Cr | 12.5% | 15% | 4% | 14.95% (approx.) |
| Above ₹2 Cr | 12.5% | 15% (capped) | 4% | 14.95% (max cap) |
📝 Note: The older regime (20% with indexation) is no longer available for transactions executed on or after 23rd July 2024.
Short-Term Capital Gains (STCG)
If you sell a property within 24 months, the gain is classified as Short-Term Capital Gain and taxed as ordinary income at slab rates (NRIs are generally taxed at a flat 30%).
Effective Tax Rate on STCG for NRIs:
| Total Income (incl. STCG) | Base Rate | Surcharge | Cess (4%) | Effective TDS |
|---|---|---|---|---|
| Up to ₹50 Lakh | 30% | Nil | 4% | 31.20% |
| ₹50 Lakh – ₹1 Crore | 30% | 10% | 4% | 34.32% |
| ₹1 Crore – ₹2 Crore | 30% | 15% | 4% | 35.88% |
⚠️ Important: The rate of 34.32% applies only if your total income exceeds ₹50 lakh. It is not a flat rate applicable to all NRI sellers.
If your income is lower, or your gain is modest compared to the sale value, you can apply for a Lower Deduction Certificate (LDC).
How to Reduce TDS: Apply for a Lower Deduction Certificate (LDC)
Without intervention, the buyer will deduct TDS on full sale value, not just the gains. But there’s a way to reduce this:
Apply for a Lower Deduction Certificate under Section 197
If your actual capital gain is much lower than the sale value, apply for a Lower TDS Certificate (Form 13).
Required Steps:
- Hire a Chartered Accountant (CA) to compute capital gains.
- Apply Form 13 on TRACES portal.
- Submit: PAN, passport, purchase deed, proposed sale deed, OCI/PIO card, capital gains computation.
- Receive certificate from Assessing Officer in 2–6 weeks.
- Share it with the buyer before the sale.
⚠️ Without LDC, the buyer is legally bound to deduct full TDS on sale value.
Buyer & Seller Compliance Checklist
Buyer Obligations
- Deduct TDS under Section 195 (not 194IA)
- Obtain TAN for tax deduction
- File Form 27Q quarterly
- Issue Form 16A to NRI seller
Seller Obligations (NRI)
- Confirm your residency status
- Apply early for LDC if gains are lower
- File Income Tax Return to claim any refund
- Submit Form 15CA/15CB for repatriation
- Keep all documents handy: sale deed, agreement, TDS certificate, PAN, etc.
Reinvestment Options to Save Tax
If you’re looking to reinvest proceeds to reduce or avoid capital gains tax, explore:
- Section 54: Buy another residential property in India within 1–2 years.
- Section 54EC: Invest up to ₹50 lakh in notified Capital Gain Bonds (NHAI/REC) within 6 months.
- Section 54F: Applies if you’re selling a non-residential asset and reinvesting in residential property.
🧠 Consult a good CA for eligibility, timelines, and proof documentation required.
Strategic Advice for NRI Sellers
- ✅ Plan 45–60 days before sale if you wish to apply for LDC
- ✅ Work only with MahaRERA-registered real estate consultants
- ✅ Keep property documents indexed & digitised
- ✅ Ensure buyer awareness about TDS and legal liability
- ✅ Avoid hasty sales—structure wisely to save lakhs
Repatriating Sale Proceeds Abroad
NRIs can repatriate up to USD 1 million per financial year under FEMA guidelines.
- Sale proceeds must go to NRO account
- Submit Form 15CA/CB through a CA
- Bank will require TDS proof, sale deed, and tax computation
Want Personal Assistance?
Selling property from abroad can be overwhelming. From TDS clarity to buyer coordination and document handling, I’ve helped 100+ NRIs smoothly close property deals in India.
👉 To consult with Thane’s NRI Property Transaction Specialist, call Arosh John at +91-9819881455
Final Thoughts
The new 12.5% LTCG regime simplifies taxation, but the default TDS deduction slabs can result in high deductions if you’re unprepared. With proper planning, CA guidance, and transaction support, NRIs can save tax, ensure compliance, and secure faster repatriation.
About the Author
Arosh John is a real estate consultant with over a decade of expertise in NRI property transactions, resale advisory, and compliance-oriented sales closures. He is the founder of John Real Estate and editor of Thanerealestatenews.com, a portal that simplifies real estate for homebuyers, investors, and NRIs.
Disclaimer
This blog is for general informational purposes and should not be construed as legal or tax advice. Always consult a qualified Chartered Accountant (CA) for taxation, FEMA compliance, and income tax return filing related to property transactions in India.
