Capital Gains Tax for NRIs Selling Property in India

title: "Capital Gains Tax for NRIs Selling Property in India" tag: "NRI Corner" category: "NRI Corner" description: "Capital gains tax rules for NRIs selling property in India: LTCG/STCG rates, TDS deduction, Section 54 exemption, lower TDS certificate, and repatriation impact." readTime: "10 min" views: "4.6K" publishedAt: "2026-01-18" primaryKeyword: "capital gains tax nri property india" secondaryKeywords:

• "nri property sale tax"
• "nri ltcg property"
• "tds nri property sale" tags:
• "NRI Corner"
• "Tax"
• "Capital Gains"

NRI Capital Gains Tax: Higher TDS, Same Rates

NRIs pay the same capital gains tax rates as residents (12.5% LTCG, slab rate for STCG). The difference is in TDS: buyers must deduct 20% TDS on the full sale consideration for LTCG (not just the gain), compared to 1% for resident sellers.

Tax Rates for NRI Property Sale

The TDS Over-Deduction Problem

When a buyer deducts 20% TDS on the full sale value (not just the gain), the TDS often exceeds the actual tax liability significantly.

Example:

• Sale price: Rs 1.5 Cr
• Purchase price: Rs 80L (5 years ago)
• Capital gain: Rs 70L
• Actual tax (12.5%): Rs 8.75L
• TDS deducted (20% of Rs 1.5 Cr): Rs 30L
• Over-deduction: Rs 21.25L (locked until ITR refund)

How to Avoid Over-Deduction: Section 197 Certificate

Apply to the Income Tax Department for a lower TDS certificate before the sale. This certificate instructs the buyer to deduct TDS at the actual applicable rate (based on your computed gain), not the standard 20%.

Application Process

1. File Form 13 online on the Income Tax e-filing portal
2. Attach: property documents, purchase proof, cost computation
3. Processing time: 2-4 weeks
4. Certificate issued specifying lower TDS rate

Section 54 Exemption for NRIs

NRIs can claim the same Section 54 exemption as residents: reinvest capital gains in another residential property within 2 years (purchase) or 3 years (construction) to avoid LTCG tax entirely.

If you cannot identify a property before ITR filing deadline, deposit gains in a Capital Gains Account Scheme (CGAS) at a nationalized bank.

Impact on Repatriation

Capital gains tax must be paid before repatriation. Only after-tax proceeds can be sent abroad. Use our NRI Tax Calculator to estimate your net repatriable amount.

For NRI property sale tax planning, book a consultation.