NRI Property Sale in India 2026: TDS, Capital Gains and Repatriation
Last updated: 13 October 2026
Quick answer (NRI Property Sale): When an NRI sells property in India, the buyer must deduct TDS under section 393(2) of the Income-tax Act, 2025: 12.5% plus surcharge and 4% cess on long-term gains (13% to 14.95%), and 30% plus surcharge and cess on short-term gains. Without a Form 128 lower-deduction certificate, buyers usually deduct on the full price. Proceeds can be repatriated up to USD 1 million a year from NRO.
Last updated: 13 October 2026 Quick answer (NRI Property Sale): When an NRI sells property in India, the buyer must deduct TDS under section 393(2) of the Income-tax Act, 2025: 12.5% plus surcharge and 4% cess on long-term gains (13% to 14.95%), and 30% plus surcharge and cess on short-term gains. Without a Form 128 lower-deduction certificate, buyers usually deduct on the full price. Proceeds can be repatriated up to USD 1 million a year from NRO. Key takeaways Rate: long-term gain (held over 24 months) taxed at 12.5% without indexation; NRIs cannot choose the 20%-with-indexation option. No ₹50 lakh threshold: the resident 1% rule does not apply; even a ₹30 lakh flat attracts TDS if the seller is an NRI. Form 128: replaced Form 13 from 1 April 2026; it can cut TDS to the tax actually due. No TAN from 1 October 2026: resident individual and HUF buyers can deduct using their PAN via Form 141. Forms 145 and 146: replaced 15CA and 15CB for remitting the money abroad. Repatriation: up to USD 1 million per financial year from NRO, plus the original foreign-exchange investment for up to two homes. An NRI in Dubai sells her parents' old flat in Kothrud for ₹1.2 crore. Her real gain is ₹70 lakh and her real tax about ₹10 lakh. Yet the buyer's CA insists on withholding almost ₹18 lakh, because the law makes the buyer liable if too little is deducted. That gap, and the months it takes to recover it, is the single biggest surprise for NRIs selling property in India. This guide explains NRI property sale TDS as it works in October 2026, after the Income-tax Act, 2025 replaced the 1961 Act on 1 April 2026. We cover the rates, how to compute the capital gain, the Form 128 lower-deduction certificate, the new PAN-based route for buyers, reinvestment exemptions and the FEMA rules for sending the money abroad. How much TDS is deducted when an NRI sells property in India? TDS on payments to non-residents now sits in section 393(2) of the Income-tax Act, 2025 (the old section 195). The buyer, whoever they are, must deduct tax on the capital gain portion of the payment at the rates that apply to the NRI seller. The rate depends on how long the property was held. Holding period Type of gain Base rate Effective TDS (with surcharge and 4% cess) More than 24 months Long-term (LTCG) 12.5%, no indexation 13% (up to ₹50 lakh), 14.3% (₹50 lakh–₹1 crore), 14.95% (above ₹1 crore) 24 months or less Short-term (STCG) 30% 31.2% rising to about 39% at the highest surcharge slab Any, seller resident Not applicable 1% of price if ₹50 lakh or more 1% (section 393(1), old 194-IA) Surcharge on long-term capital gains is capped at 15%, which is why the long-term rate never exceeds 14.95%. Short-term gains on property get no such cap. In practice, buyers apply the surcharge slab according to the sale value, because they cannot see the seller's total income. Bar chart of NRI property sale TDS effective rates: 13%, 14.3% and 14.95% on long-term capital gains Why does the buyer deduct on the full price? The law asks the buyer to deduct on the "sum chargeable" to tax, which is the gain, not the price. But the buyer has no reliable way to verify the seller's purchase cost. Since an under-deducting buyer becomes an "assessee in default" and faces interest and penalty, most buyers and their banks deduct on the entire consideration unless the seller produces a certificate from the tax officer. That is why the certificate matters so much. On a ₹1.2 crore sale, the difference between 14.95% of the price and the real tax can be ₹8 lakh or more. How is capital gains tax calculated on an NRI property sale? The capital gain is the sale price minus the cost of acquisition, the cost of improvement and transfer expenses such as brokerage. Stamp duty and registration paid at purchase form part of the cost. If you inherited the property, the previous owner's cost and holding period count as yours. Since 23 July 2024, long-term gains on land and buildings are taxed at 12.5% without indexation. Resident individuals and HUFs who bought before that date can instead pay 20% with indexation if lower, but this choice is not available to NRIs. Our guide on tax on property sale and sections 54, 54F and 54EC (/insights/tax-on-property-sale-section-54-54f-54ec) explains the resident option in detail. Worked example: ₹1.2 crore Pune flat Priya, an NRI in Dubai, bought a flat in 2014 for ₹45 lakh, paid ₹3 lakh in stamp duty and registration, and spent ₹2 lakh on documented improvements. She sells in November 2026 for ₹1.2 crore. Cost: ₹45 lakh + ₹3 lakh + ₹2 lakh = ₹50 lakh. Long-term gain: ₹1.2 crore − ₹50 lakh = ₹70 lakh. Tax: 12.5% = ₹8.75 lakh; plus 10% surcharge (income between ₹50 lakh and ₹1 crore) and 4% cess = about ₹10.01 lakh . TDS without a certificate: 14.95% of ₹1.2 crore = about ₹17.94 lakh , roughly ₹7.9 lakh more than her real tax. If Priya also invests ₹50 lakh in specified bonds under section 85 (the old 54EC) within six months, her taxable gain falls to ₹20 lakh and tax to about ₹2.6 lakh. A certificate can reflect this, so the buyer withholds only that amount. Comparison of TDS on NRI property sale without a lower deduction certificate versus actual capital gains tax How to get a lower TDS certificate (Form 128) as an NRI From 1 April 2026, Form 128 under section 395(1) replaced the old Form 13. The NRI seller applies online through the TRACES portal, and the assessing officer issues a certificate specifying the rate or amount the named buyer should deduct. The officer looks at your estimated income for the year, past tax record and any outstanding demand. Prepare the computation: purchase deed, stamp duty receipts, improvement bills, sale agreement, buyer's PAN, and proof of any planned reinvestment. File Form 128 on TRACES: enter the estimated income, the buyer's details and the rate you are seeking; sign with a digital signature or EVC. Answer queries quickly: officers often ask for clarifications by email or on the portal. Share the certificate with the buyer: it is issued in the buyer's name and covers only the payments it specifies. Apply as soon as the sale agreement is near final. Processing commonly takes several weeks. The certificate cannot be applied to payments already made, so the token amount may still suffer full TDS. It is valid only within the tax year, so a deal slipping past 31 March may need a fresh application. What if the certificate does not arrive in time? The sale can still close. The buyer deducts at the full rate, and you claim the excess as a refund when you file your return (ITR-2 for most NRIs). The refund carries interest, but expect it only after processing. Clear any old tax demands first, since they can be adjusted against the refund. What changed for buyers from 1 October 2026? Until now, a resident buying from an NRI had to obtain a TAN, file a quarterly TDS return and issue a TDS certificate. Many individual buyers found this daunting, and some walked away from NRI-owned listings. Under amendments to the Income-tax Rules notified by the CBDT in September 2026, resident individuals and HUFs buying from a non-resident can, from 1 October 2026, deduct and deposit TDS using their PAN through Form 141 (new Schedule E), as resident-to-resident deals already did. The TDS rate and the certificate requirement do not change. Companies and firms still need a TAN. The deposit deadline is 30 days from the end of the month of deduction. Purpose Old form (1962 Rules) New form (2026 Rules) Lower or nil TDS certificate Form 13 Form 128 Remittance information Form 15CA Form 145 CA certificate for remittance Form 15CB Form 146 Quarterly TDS return for non-resident payments Form 27Q Form 144 TDS certificate (non-salary) Form 16A Form 131 Annual tax statement Form 26AS Form 168 Before the deal, the buyer should confirm your residential status for the year. Citizenship or a foreign address does not settle it; days spent in India do. See our NRI taxation guide (/insights/nri-taxation-india-guide) for the residency tests. Can NRIs save capital gains tax by reinvesting? Yes. The reinvestment exemptions apply to NRIs as they do to residents, now under new section numbers. Section 82 (old 54): sell a residential house and buy or build another residential house in India within the time limits; the exemption is capped at ₹10 crore of gain. Section 85 (old 54EC): invest up to ₹50 lakh of the gain in specified bonds (such as REC, PFC, IRFC) within six months; five-year lock-in. Check that the issuer accepts NRI applications, which are typically on a non-repatriation basis. Section 86 (old 54F): for long-term assets other than a house, such as a plot; the entire net sale price must be reinvested in one Indian house. Unspent amounts can be parked in the Capital Gains Account Scheme before the return due date. Our bonds guide (/insights/bonds-101-india) covers how 54EC-type bonds work, and Money n Wealth's bond desk (/products/bonds) can help with applications. Six steps for an NRI selling property in India: compute gain, Form 128, TDS, Form 168, Forms 145 and 146, ITR How much of the sale money can an NRI repatriate? Tax is only half the job. The Foreign Exchange Management Act decides how much money can leave India. According to the RBI's FAQ on immovable property, NRIs and OCIs can repatriate sale proceeds of non-agricultural property when three conditions are met. The property was acquired in line with the foreign exchange law in force at the time. The purchase was paid for in foreign exchange through banking channels, or from NRE or FCNR(B) accounts. For residential property, this route covers no more than two properties. In practice, banks allow the amount originally paid in foreign exchange to go out directly. Any gain above that, and proceeds from property bought in rupees or inherited, are credited to your NRO account. From NRO, you can remit up to USD 1 million per financial year (April–March). That ceiling covers all NRO remittances combined, including other asset sales. Comparison of NRI property sale repatriation routes: foreign-exchange purchase versus NRO USD 1 million limit The paperwork for remittance The bank will ask for Form 145 (the old 15CA), filed online, and Form 146 (the old 15CB), a chartered accountant's certificate confirming tax has been paid. Keep the sale deed, the TDS certificate, the lower-deduction certificate if any, and proof of the original foreign-exchange payment. If proceeds exceed USD 1 million in one year, you can split the remittance across financial years. Which account to use matters. Our comparison of NRE vs NRO vs FCNR accounts (/insights/nre-vs-nro-vs-fcnr-accounts) explains why sale proceeds generally go to NRO, not NRE. What about tax in your country of residence? Most of India's tax treaties let India tax gains from immovable property located here. Your country of residence may also tax the gain, usually giving credit for Indian tax paid. The US, UK, Canada and Australia, for example, tax residents on worldwide income. The UAE has no personal income tax, so an NRI there bears only the Indian tax. Keep your TDS certificates and ITR acknowledgement; foreign tax authorities usually need them to grant credit. If you plan to return to India soon, timing matters: see our guide to RNOR status and returning-NRI tax planning (/insights/returning-nri-rnor-tax-planning) . Common mistakes NRIs make when selling property Accepting the price without a TDS plan: an advance received before the certificate suffers full TDS. Not knowing the cost: lost purchase papers make the gain look larger. Rebuild them from the sub-registrar's records early. Using an old PAN status: an inoperative PAN, or one not linked as required, can push TDS to 20% or higher. Ignoring short-term status: a flat held under 24 months, such as a recent under-construction possession, faces about 31% or more. Skipping the return: refunds of excess TDS come only through the ITR. Power of attorney gaps: a PoA executed abroad generally needs attestation at the Indian mission and adjudication in India before use. If you also earn rent from Indian property before selling, see how rental income is taxed (/insights/rental-income-tax-30-percent-deduction-india) ; tenants also deduct TDS on rent paid to NRIs. Related reading NRI taxation in India: residency, TDS and DTAA (/insights/nri-taxation-india-guide) Tax on property sale: sections 54, 54F and 54EC (/insights/tax-on-property-sale-section-54-54f-54ec) NRE vs NRO vs FCNR accounts (/insights/nre-vs-nro-vs-fcnr-accounts) GIFT City investing for NRIs and residents (/insights/gift-city-investing-guide) What the Income-tax Act 2025 changed (/insights/income-tax-act-2025-changes-individuals) NRI investing from Pune (/insights/nri-investment-advisor-in-pune) Frequently Asked Questions What is the TDS rate on property sold by an NRI in 2026? For property held over 24 months, TDS is 12.5% of the long-term gain plus surcharge and 4% cess: effectively 13% up to ₹50 lakh, 14.3% from ₹50 lakh to ₹1 crore, and 14.95% above ₹1 crore. For property held 24 months or less, the base rate is 30% plus surcharge and cess. The provision is section 393(2) of the Income-tax Act, 2025. Does the ₹50 lakh TDS threshold apply when buying from an NRI? No. The ₹50 lakh threshold and 1% rate apply only when the seller is a resident, under section 393(1). When the seller is a non-resident, TDS applies whatever the price, at the capital gains rates applicable to the seller, so even a ₹25 lakh flat attracts TDS. Does a buyer need a TAN to buy property from an NRI? Not from 1 October 2026 if the buyer is a resident individual or HUF. Under CBDT's amended rules, such buyers can deduct and deposit TDS using their PAN through Form 141 (Schedule E) and issue the certificate on Form 132. Companies, firms and other buyers still need a TAN and file the non-resident TDS return. How long does a lower TDS certificate take for an NRI? Form 128 applications on TRACES are commonly processed in a few weeks, though it varies by officer and season; applications near 31 March are usually slower. Apply as soon as the sale terms are agreed, with a complete capital gains computation, and respond quickly to queries. The certificate covers only payments made after it is issued. Can an NRI claim indexation on property bought before 2024? No. The option to pay 20% with indexation on land and buildings bought before 23 July 2024 is available only to resident individuals and HUFs. NRIs pay 12.5% on the unindexed gain. For older properties, this can make NRI tax higher than a resident's, which is worth factoring into timing if you plan to return to India. How much money can an NRI send abroad after selling property? Under FEMA, the amount originally paid in foreign exchange can be repatriated for up to two residential properties. Other proceeds, including gains and inherited property, go through the NRO account, from which up to USD 1 million per financial year can be remitted, supported by Forms 145 and 146. What are Forms 145 and 146? They replaced Forms 15CA and 15CB from 1 April 2026. Form 145 is the online declaration of the remittance to a non-resident. Form 146 is a chartered accountant's certificate confirming the nature of the payment and that applicable tax has been deducted or paid. Banks need them before sending NRO funds abroad. Sources: Income Tax Department: forms under Income-tax Rules 2026 (https://www.incometaxindia.gov.in/faqs-and-guidance-notes-on-forms-as-per-income-tax-rules-2026) ; Income Tax Department: 1961 vs 2025 Act section mapping (https://www.incometaxindia.gov.in/utility-to-check-provisions-of-income-tax-act-1961-vis-a-vis-income-tax-act-2025) ; Section 197, Income-tax Act 2025 (https://www.incometaxindia.gov.in/w/section-197-78) ; RBI FAQ: purchase of immovable property (https://website.rbi.org.in/web/rbi/faq-page-4?delta=50) ; Outlook Money: no TAN needed from 1 October 2026 (https://www.outlookmoney.com/tax/buying-a-home-from-an-nri-you-no-longer-need-a-tan-for-tds) ; TaxHeal: TDS on NRI property sales under the 2025 Act (https://www.taxheal.com/?p=127334) . Worked examples are Money n Wealth calculations. Selling a property in India from abroad? A clean TDS certificate, the right reinvestment and a planned repatriation can save lakhs and months of waiting. Talk to Money n Wealth (/contact) for a free portfolio review and help with tax consultation (/products/tax) . This article is for general educational purposes only and does not constitute financial advice. Figures and examples are illustrative. Please consult a qualified financial adviser for guidance specific to your situation. Money n Wealth (Predics Fintech Services Pvt Ltd) is an AMFI-registered Mutual Fund Distributor (ARN-121995) and APMI-registered PMS Distributor (APRN07444); it is not a SEBI-registered investment adviser and may earn distribution commission on investments made through it.
Frequently Asked Questions
What is the TDS rate on property sold by an NRI in 2026?
For property held over 24 months, TDS is 12.5% of the long-term gain plus surcharge and 4% cess: effectively 13% up to ₹50 lakh, 14.3% from ₹50 lakh to ₹1 crore, and 14.95% above ₹1 crore. For property held 24 months or less, the base rate is 30% plus surcharge and cess. The provision is section 393(2) of the Income-tax Act, 2025.
Does the ₹50 lakh TDS threshold apply when buying from an NRI?
No. The ₹50 lakh threshold and 1% rate apply only when the seller is a resident, under section 393(1). When the seller is a non-resident, TDS applies whatever the price, at the capital gains rates applicable to the seller, so even a ₹25 lakh flat attracts TDS.
Does a buyer need a TAN to buy property from an NRI?
Not from 1 October 2026 if the buyer is a resident individual or HUF. Under CBDT's amended rules, such buyers can deduct and deposit TDS using their PAN through Form 141 (Schedule E) and issue the certificate on Form 132. Companies, firms and other buyers still need a TAN and file the non-resident TDS return.
How long does a lower TDS certificate take for an NRI?
Form 128 applications on TRACES are commonly processed in a few weeks, though it varies by officer and season; applications near 31 March are usually slower. Apply as soon as the sale terms are agreed, with a complete capital gains computation, and respond quickly to queries. The certificate covers only payments made after it is issued.
Can an NRI claim indexation on property bought before 2024?
No. The option to pay 20% with indexation on land and buildings bought before 23 July 2024 is available only to resident individuals and HUFs. NRIs pay 12.5% on the unindexed gain. For older properties, this can make NRI tax higher than a resident's, which is worth factoring into timing if you plan to return to India.
How much money can an NRI send abroad after selling property?
Under FEMA, the amount originally paid in foreign exchange can be repatriated for up to two residential properties. Other proceeds, including gains and inherited property, go through the NRO account, from which up to USD 1 million per financial year can be remitted, supported by Forms 145 and 146.
What are Forms 145 and 146?
They replaced Forms 15CA and 15CB from 1 April 2026. Form 145 is the online declaration of the remittance to a non-resident. Form 146 is a chartered accountant's certificate confirming the nature of the payment and that applicable tax has been deducted or paid. Banks need them before sending NRO funds abroad.
Selling a property in India from abroad?
A clean TDS certificate, the right reinvestment and a planned repatriation can save lakhs and months of waiting. Talk to Money n Wealth for a free portfolio review and help with tax consultation .
