If you've held the property for more than 24 months, you pay 12.5% on the gain, plus surcharge and cess. The buyer will usually deduct TDS on the whole sale price, not just the gain, unless you apply for a Form 128 (a lower-deduction certificate) before you sign — otherwise a large amount is held back until your refund comes through.
Is this you? This guide covers residential and commercial property bought and held directly. Selling agricultural land or a property you inherited? Those have extra rules: see selling agricultural land as an NRI and tax on inherited property.
This assumes you're a non-resident for the whole tax year. Moving back this year? Check your residency status first, because the answer can change.
This guide is part of our guide to property tax for NRIs, which also covers buying, renting and inheriting. Here we follow one sale from agreement to money in your foreign account.
What you’ll owe
What you pay depends on how long you held the property. The clock runs from the date you bought it (or the date the original owner bought it, if you inherited it) to the date of the sale deed. Our explainer on how the gain is worked out covers cost, improvements and selling costs.
| Held for | Type of gain | Tax rate for NRIs |
|---|---|---|
| Up to 24 months | Short-term | Added to your Indian income and taxed at slab rates (we use 30% to approximate the top slab) |
| More than 24 months | Long-term | 12.5%, without indexation |
Surcharge then applies on top once your total Indian income crosses a threshold, rising in bands. On a long-term gain it’s capped at 15%. A short-term gain is taxed as ordinary income, so it follows the normal surcharge bands, which go higher on very large gains. A 4% health and education cess applies to the tax plus surcharge after that. 2025 Act s. 197was s. 112
To work out the tax on your own sale, use the capital gains on property calculator.
The tax year (2026-27) runs from 1 April to 31 March. Under the old Act this was called the previous year (or financial year), with the assessment year following it.
Why the buyer deducts so much
When the seller is a non-resident, the buyer must deduct TDS before paying you and deposit it with the government — they can’t use the simple rule that applies when the seller is resident. 2025 Act s. 393(2) Table Sl. 17was s. 195 From 1 October 2026, a resident individual or HUF buyer doesn’t even need a TAN for this: they pay and report the deduction themselves through the PAN-based Form 141, and give you a Form 132 certificate for that route. A company or firm buyer still needs a TAN 2025 Act s. 397(1)was s. 203A, deducts at the capital-gains rate plus surcharge and cess, and must file the quarterly Form 144, issuing you a Form 131 once they have.
The buyer can’t verify what you paid for the property, so unless you hand them a certificate that says otherwise, they deduct on the full sale price. That is where the money gets stuck: you’re taxed as if the whole price were profit, and you wait for a refund to get the difference back. The fix is to get a lower-deduction certificate before you sign.
Worked example
Anita lives in Texas. She sells her flat in Pune and has no other Indian income that tax year. To keep it simple, we ignore stamp duty and brokerage.
| Their actual tax | Amount |
|---|---|
| Long-term gain (₹1,20,00,000 − ₹60,00,000) | ₹60,00,000 |
| Tax at 12.5% | ₹7,50,000 |
| Surcharge | ₹75,000 |
| Cess | ₹33,000 |
| Tax actually owed | ₹8,58,000 |
Without a certificate, the buyer deducts the same rate plus its own surcharge band and cess on the whole ₹1.2 crore.
Try your own numbers
TDS on your sale
Pre-filled with Anita's flat in Pune's sale. Change any figure; results update as you type.
Step by step
- Gather your purchase papersPurchase deed, payment receipts, stamp duty and improvement bills. These set your cost, and your cost sets your tax.
- Apply for a lower-deduction certificateApply on TRACES using Form 128 (was Form 13), with the draft sale agreement and your cost working, before you sign. Allow several weeks. 2025 Act s. 395(1)was s. 197
Before the agreement - Tell the buyer how they’ll payGive an individual or HUF buyer your PAN so they can use the PAN-based route, plus your phone number, email and overseas address, which their statement asks for whether or not you have a PAN (without a PAN, also your tax residency certificate number and foreign tax ID); a company or firm buyer needs your PAN and certificate, and must have its own TAN. Ask for proof of the deduction once they’ve paid it in.
- Receive the money in your NRO accountSale proceeds go to an NRO account unless you bought the property with money from abroad or from an NRE or FCNR account. Then your bank can credit them to NRE instead; ask it first.
- Move it abroadUp to USD 1 million per financial year from NRO, with Form 145 and Form 146 from a CA.
- File your ITRReport the gain, claim the TDS, and get back anything deducted over what you owe. If you also let out a flat, the same return reports the rent: see how rent from Indian property is taxed.
31 July 2027
Paying less tax, legitimately
Two exemptions can reduce or remove a long-term gain. If you plan to use either, apply for the lower-deduction certificate on that basis so the buyer deducts less from the start.
Buy another home in India
Sold a residential house? Reinvest the gain in one residential house.
- Buy
- 1 year before, or 2 years after
- Build
- within 3 years of the sale
- Cap
- the new house’s cost counted is capped at ₹10,00,00,000
Capital-gain bonds
Invest the gain in specified bonds (NHAI, REC and similar).
- Invest
- within 6 months of the sale
- Limit
- ₹50,00,000, across the year of sale and the year after, combined
- Lock-in
- 5 years
Sold a plot or commercial property instead? A different home-purchase exemption applies, and it works on the whole net sale price, not just the gain. 2025 Act s. 86was s. 54F Our guide to reducing tax on a property sale covers the conditions in full, including what happens if you sell the new home within 3 years.
Documents and deadlines
| Done | What | Who | When |
|---|---|---|---|
| Form 128 (was Form 13) application | You, on TRACES | Before the agreement | |
| PAN and certificate to the buyer | You | Before payment | |
| TDS deposited and reported: an individual or HUF buyer on Form 141 | Buyer | Within 30 days of the end of the month they deduct | |
| TDS deposited by a company or firm buyer, then Form 144 | Buyer | Due 7 days into the next month | |
| Form 132 from an individual or HUF buyer, or Form 131 from a company or firm | Buyer to you | After they report it | |
| Form 145 and Form 146 | You and a CA | Before each transfer abroad | |
| ITR reporting the gain | You | 31 July 2027 |
Where you live changes the other half
India taxes the sale wherever you live. Your country of residence may tax it too, usually with credit for the Indian tax.
The sale is also taxable on your US return. The Indian tax you actually pay can usually be claimed as a foreign tax credit — not the larger amount initially withheld.
US tax on selling Indian property US section
UK residents report the gain to HMRC as well, with credit for the Indian tax under the India–UK treaty.
India–UK tax treaty guide
Canadian residents report worldwide capital gains to the CRA and claim a foreign tax credit for the Indian tax.
India–Canada tax treaty guide
The UAE has no personal income tax, so the Indian tax is the only tax on the sale. Your main job is getting the lower-deduction certificate so less is held back in the first place.
India tax for NRIs in the UAE
Australian residents include the gain in their tax return, with a foreign income tax offset for the Indian tax.
India–Australia tax treaty guide
Moving the proceeds abroad? Compare what banks and transfer services charge before you send a large sale amount.Partner link. We may earn a fee; it doesn't change our comparison.
Compare transfer costsCommon mistakes
- Leaving the certificate too late. Anything the buyer pays before it’s issued, including an advance at signing, is deducted at the full rate.
- Asking the buyer to pay into an NRE account without checking with your bank first. Unless you bought with money from abroad or from NRE or FCNR, the proceeds must go to NRO.
- Skipping the ITR because “tax was already deducted”. No return means no refund, and possibly a notice. And a return isn’t complete until you e-verify it, which you can do from abroad.
- Not keeping proof of the TDS paid, so the credit never shows against your PAN.
When to get a chartered accountant
Get one when you apply for the lower-deduction certificate, because the cost working decides your rate. You’ll also need one for Form 146 before moving money abroad, and whenever the property was inherited, jointly owned with a resident, or bought in instalments over several years.
Questions people ask
Can I sell property in India without travelling there?
Yes. Give a power of attorney to a relative or friend in India, who signs the sale deed for you. Sign it at an Indian consulate abroad, or sign locally and get it apostilled and adjudicated in India. The buyer still deducts TDS against your PAN, and the money still goes to your NRO account.
How long does the TDS refund take?
The refund is processed after you file and e-verify your return. Most delays come from two things: a bank account that isn't pre-validated on the e-filing portal, or a buyer who hasn't reported the deduction, so the credit doesn't show against your PAN. Check your Form 168 (was Form 26AS) before you file, and chase the buyer first if the credit is missing.
Does the buyer still need a TAN?
Only sometimes. From 1 October 2026, a resident individual or HUF buying from an NRI doesn't need a TAN: they pay and report the deduction through the PAN-based Form 141 instead. A company or firm buyer still needs a TAN, deducts as before, files the quarterly Form 144 and issues you a Form 131.
Is the 1% TDS rule relevant to NRIs?
No. The 1% rule applies only when the seller is resident. When the seller is an NRI, the buyer deducts at the capital-gains rate plus surcharge and cess instead. Buyers used to resident sellers sometimes apply the resident rate by mistake, which leaves them liable for the shortfall, so tell your buyer or their CA early that you're non-resident.
Can I use indexation on a property bought before July 2024?
No. Residents who bought before 23 July 2024 can compare paying 20% with indexation against the flat rate. That option isn't open to non-residents — as an NRI you pay 12.5% on the gain worked out on your actual cost, with no inflation adjustment.
Can the sale money go straight to my foreign bank account?
No. Proceeds normally land first in your NRO account in India. From there you can send up to USD 1 million per financial year abroad, after a CA issues Form 146 and you file Form 145 online. If you paid for the property from abroad or from an NRE or FCNR account, the sale proceeds can go abroad outside that yearly limit, for up to two homes in your lifetime. Some banks still cap this at what you paid in foreign exchange and send the rest through the yearly limit, so ask yours first. Your bank will ask for the sale deed and proof of tax paid, so keep your TDS certificate and ITR acknowledgement ready.
Sources
- Income-tax Act, 2025: capital gains, TDS and certificates for non-residents (ss. 197, 395, 397)egazette.gov.in
- Finance Act, 2026: rates, surcharge and cess (First Schedule)egazette.gov.in
- CBDT Notification 121/2026: TAN exemption and Forms 132/141 for property bought from an NRIincometax.gov.in
- RBI Master Direction: remittance of assets by NRIsrbi.org.in
- Income Tax Department: Form 128, application for a lower or nil TDS certificateincometaxindia.gov.in
Update log
- First published.
- Common mistakes: a return counts only once it is e-verified; linked the e-verify guide.