NRI Selling Property in India 2026: 12.5% LTCG, No Indexation
NRIs selling property in India after July 23, 2024 pay long-term capital gains at a flat 12.5% with no indexation benefit. This guide covers TDS under Section 195, exemptions under Sections 54, 54EC and 54F, and the Form 15CB/15CA route for repatriating sale proceeds under FEMA.
CA Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Legal basis: Income Tax Act 1961, Section 195 (TDS on payments to non-residents; renumbered Section 393 under the Income Tax Act 2025) and Sections 54, 54EC, 54F (capital gains exemptions), read with the LTCG rate and indexation changes introduced by the Finance (No. 2) Act 2024 — Effective: July 23, 2024 (indexation removal and 12.5% LTCG rate); Income Tax Act 2025 provisions effective April 1, 2026. Source: incometaxindia.gov.in. Last reviewed by CA Harun Raaj: September 2026.
Key point: NRIs selling Indian property on or after July 23, 2024 pay long-term capital gains at a flat 12.5% with no indexation, and must complete Form 15CB and Form 15CA before a bank will remit sale proceeds abroad.
If you are an NRI, OCI, or PIO planning to sell property in India, the tax and regulatory framework changed significantly on July 23, 2024. The Finance (No. 2) Act 2024 abolished indexation for capital gains and revised the long-term capital gains (LTCG) rate to 12.5%. The Income Tax Act 2025 (effective April 1, 2026) has codified these changes. This guide explains the current tax treatment, the TDS obligations on your buyer, and the FEMA steps to remit proceeds abroad.
What Changed on July 23, 2024
Before July 23, 2024, NRIs selling property computed long-term gains using the indexed cost of acquisition — adjusting the purchase price for inflation using the Cost Inflation Index (CII). The tax rate was 20%.
After July 23, 2024, indexation is removed for all assets sold on or after this date. The LTCG rate is now 12.5% flat, with no inflation adjustment available. The CII for FY 2026-27 is 384 (CBDT Notification 85/2026) — but it is no longer usable for computing gains on transfers made after July 23, 2024.
Capital Gains Rates for NRIs Selling Property
A property is long-term if held for more than 24 months.
Long-term capital gains (LTCG): 12.5% flat on gains, with no indexation. Surcharge and health and education cess apply on the base tax.
Short-term capital gains (STCG): For property held 24 months or less, taxed at the applicable income tax slab rate (maximum 30% for NRIs).
Who Deducts TDS — and at What Rate
The buyer is required to deduct TDS under Section 195 of the Income Tax Act 1961 (Section 393 under the Income Tax Act 2025) before paying the NRI seller. Without a lower deduction certificate, buyers typically deduct TDS on the full sale consideration — not just the capital gain — which locks up excess capital unnecessarily.
To secure a lower TDS rate, the NRI seller can apply under Form 128 (renamed from Form 13 under the Income Tax Act 1961) on the TRACES portal, requesting the Assessing Officer to certify the actual lower rate based on computed gains and applicable exemptions. Processing time is typically 4-6 weeks. Apply before the sale deed is registered.
Exemptions Available to NRIs
DTAA exemption: Check whether India's right to tax the gain is restricted under the applicable treaty. India generally retains the right to tax immovable property gains under Article 14 of most treaties (UAE, Mauritius post-2016, Singapore, USA). Treaty analysis is mandatory for every NRI — facts around residency and beneficial ownership matter, and the MLI has affected several treaties.
The FEMA Step: Repatriating Proceeds Abroad
Selling the property is only half the compliance requirement. Taking the money out of India requires FEMA compliance:
Step 1 — TDS by buyer: The buyer deducts and deposits TDS with the government. The net amount reaches the NRI seller's NRO account.
Step 2 — Form 15CB: Your CA certifies that Indian taxes have been paid or provided for and that the remittance complies with FEMA. This certificate is mandatory before the bank processes the outward remittance.
Step 3 — Form 15CA: You, or your authorised representative, file Form 15CA Part C online on the Income Tax portal, referencing the Form 15CB details.
Step 4 — Repatriation from NRO account: Outward remittance from an NRO account is subject to a USD 1 million per financial year cap under the FEM (Remittance of Assets) Regulations, 2016 — Notification No. FEMA 13(R)/2016-RB, i.e., FEMA 395/2016-RB.
Important: If the property was originally purchased using NRE or FCNR(B) funds, the foreign currency portion of the cost can be repatriated separately and does not count against the USD 1 million cap. Your bank will require documentary evidence of the original remittance.
Illustrative Example
Illustrative — not a real client: Priya, an NRI resident in the UAE, sells a Hyderabad apartment in October 2026 for INR 85 lakh. She purchased it in 2014 for INR 30 lakh. Holding period: over 24 months — long-term asset.
Gains: INR 55 lakh (no indexation). Tax: 12.5% × INR 55 lakh = INR 6.87 lakh (before surcharge and cess). At the time of sale, her buyer deducts TDS. Priya had applied for Form 128 in advance, so TDS is deducted only on the estimated gain — not the full INR 85 lakh.
For repatriation: INR 85 lakh at USD 85/INR ≈ USD 100,000 — within the USD 1 million annual limit. Her CA files Form 15CB and she files Form 15CA on the IT portal. Her bank remits after 15CB and 15CA verification.
DTAA check: India-UAE DTAA Article 14 — India retains taxing rights on immovable property gains. No treaty relief is available on the gain itself.
This example is illustrative only and does not constitute tax or legal advice.
Disclaimer: This article is for general information only and does not constitute legal, tax, or FEMA advice. Tax laws are subject to change. Please consult a qualified Chartered Accountant for advice specific to your situation.
I'm CA Harun Raaj, Visakhapatnam. If you're an NRI planning a property sale and repatriation, reach out and we'll walk through your Form 128 application, exemption options, and 15CB/15CA filing together.
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See Also
Frequently Asked Questions
Can I claim indexation on property sold in 2025-26?
No. Indexation was removed for all asset transfers on or after July 23, 2024 by the Finance (No. 2) Act 2024. If you sold before July 23, 2024, the pre-amendment rules (20% with indexation) apply instead.
Do I need to file an Indian income tax return as an NRI after selling property?
Generally yes, if capital gains arise from an Indian asset. The Section 115G exemption from filing, available to NRIs on certain investment income, does not typically cover property sale gains.
How do I get TDS deducted only on my actual capital gain, not the full sale price?
Apply under Form 128 (renamed from Form 13) on the TRACES portal before the sale deed is registered. The Assessing Officer certifies a lower TDS rate under Section 195 based on your computed gains and applicable exemptions. Processing typically takes 4-6 weeks.
Can I hold my NRO balance indefinitely without repatriating it?
Yes, there is no time limit for repatriation. NRO account interest is taxable in India at 30% TDS. The USD 1 million per financial year limit under FEMA applies only when you actually remit funds outward, not to the balance held in the account.
What is the USD 1 million FEMA limit, and does it apply to money originally sent from abroad?
Outward remittance from an NRO account is capped at USD 1 million per financial year under the FEM (Remittance of Assets) Regulations, 2016 (Notification No. FEMA 13(R)/2016-RB, i.e., FEMA 395/2016-RB). If the property was originally purchased using NRE or FCNR(B) funds, that foreign currency portion can be repatriated separately and does not count against this cap, provided you have documentary evidence of the original remittance.
The property I am selling was a gift from my parents — what is my cost of acquisition?
In case of inheritance or gift, the cost of acquisition for the NRI is the cost to the original owner, or the fair market value on April 1, 2001 if the property was purchased before that date. Verify the applicable provisions on cost for inherited or gifted property under the Income Tax Act 2025 for your specific case.
Do I still need Form 15CB and Form 15CA if my buyer has already deducted TDS?
Yes. TDS by the buyer under Section 195 is a separate step from repatriation. Your CA must certify Form 15CB confirming Indian taxes are paid or provided for and that the remittance complies with FEMA, and you must file Form 15CA Part C on the Income Tax portal referencing that certificate, before your bank will process the outward remittance.
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