Moment guide · FY 2026-27

I am selling a foreign property after returning to India

How is a foreign property sale taxed after I return to India?

Sec 5Sec 112Sec 48Sec 90Verified 2026-08-11

As an ROR, gains on a foreign property sale are taxable in India at 12.5% LTCG without indexation if held over 24 months, with the cost and sale price converted to INR at the RBI rate on the relevant dates. Section 54's application to a foreign property is debated, so model the fully taxable outcome, and claim the foreign tax credit through Form 67 filed before the due date.

Your legitimate options

Every route the statute actually gives you — with its condition, cap and deadline.

Route	Condition	Cap / deadline
Global income as ROR	As a resident and ordinarily resident, the gain on the foreign property is taxable in India	LTCG at 12.5% without indexation if held over 24 months
Cost in INR	Convert the foreign-currency cost and sale price at the RBI rate on the respective dates	Section 48 proviso rules for foreign-currency assets
Section 54 application debated	Whether section 54 reinvestment covers a foreign property is debated; model the fully taxable case	Form 67 for the foreign tax credit

The #1 trap

Assuming section 54 covers the foreign house — the residential-house exemption is generally tied to Indian residential property, and its application to foreign property is debated, so plan for the gain to be fully taxed at 12.5%. Also, converting the cost at the wrong date's rate changes the gain materially; use the RBI rate on each relevant date and file Form 67 for the foreign tax credit.

The decision path

Follow it top to bottom — the first condition that matches is your answer.

IF you are an ROR selling a foreign property → the gain is taxable in India as part of global income.
IF you held the property over 24 months → LTCG at 12.5% with no indexation (FA 2024).
IF you convert the cost and sale price → use the RBI rate on the purchase and sale dates respectively.
IF you plan to reinvest under section 54 → its application to foreign property is debated; assume the gain is taxable unless it clearly applies.
IF you paid foreign tax on the gain → file Form 67 before the ITR due date for the credit. [VERDICT: ROR taxes the foreign gain — 54 coverage is not a given.]

Worked example

Anita, returnee selling her house in Sydney

Anita returned to India in 2024 and is now a resident and ordinarily resident. She bought a house in Sydney in 2016 for AUD 450,000, when the AUD-INR rate was ₹51, giving a cost of ₹2,29,50,000. In 2026 she sells it for AUD 620,000 at an RBI rate of ₹54, giving sale proceeds of ₹3,34,80,000. The capital gain is ₹3,34,80,000 minus ₹2,29,50,000, which is ₹1,05,30,000. Because she held the property for more than 24 months, the gain is long-term and taxed at 12.5% with no indexation after Finance Act 2024, giving ₹13,16,250 before surcharge and cess. Anita considered reinvesting the gain in an Indian house under section 54, but the exemption's application to the sale of a foreign residential property is debated, and she models the full ₹1,05,30,000 as taxable on a conservative basis. Australia taxes the gain too, and Anita claims the Australian capital gains tax paid as a foreign tax credit by filing Form 67 before the ITR due date, converting the AUD tax at the SBI TT buying rate. She converts the cost and sale price using the RBI rates on the purchase and sale dates, because using the wrong rate changes the gain materially. The proceeds are repatriated to India through banking channels. Anita files her return as an ROR, reports the gain in the capital gains schedule, and keeps the purchase deed, the sale contract and the conversion workings. A quick call with us dials in the final figure. Anita also confirms the conversion rules: the cost in INR uses the RBI rate on the purchase date and the sale proceeds use the RBI rate on the sale date, and if the currency appreciated, the gain includes the exchange-rate movement, which is part of the capital gain and not a separate income. If the foreign tax paid exceeds the Indian tax on the gain, the excess is lost, because the credit is capped at the Indian tax. The section 54 analysis for a foreign property is debated, so she plans for the full gain to be taxable and treats any exemption as a bonus rather than a given. If she reinvests in an Indian residential house within the section 54 window, the exemption applies to the extent of the reinvestment, and the balance is taxed at 12.5%. A quick call with us dials in the final figure.

Claims influencers make about this moment

Partly true“Sell your house, buy another, capital gains fully exempt under Section 54”

Questions people actually ask

Is a foreign property gain taxable after I return?

Yes — as a resident and ordinarily resident, the gain is taxable in India as part of global income: LTCG at 12.5% without indexation if held over 24 months.

How do I convert foreign currency for the gain?

Convert the cost and sale price to INR at the RBI rate on the purchase and sale dates respectively.

Does section 54 cover a foreign house?

Its application to foreign residential property is debated — assume the gain is taxable unless the exemption clearly applies, and claim foreign tax credit via Form 67.

Capital Gains Calculator →Income Tax Calculator →Or talk to us about your numbers →

Sections: 5, 112, 48, 90 · Last verified 2026-08-11 · Reviewed by Harun Raaj & Associates, Chartered Accountants. Every figure cites the Income-tax Act, 1961 (with ITA 2025 mapping via our section index).