✦ NRI Essentials
NRI Guide to Buying & Selling Property in India
Laws, taxes, TDS, repatriation rules, FEMA compliance, and Budget 2025-26 highlights — everything an NRI needs to know.
📢 Budget 2025-26 Highlights for NRIs NEW
- 💰LTCG Tax at 12.5% (no indexation): Property held > 2 years taxed at flat 12.5% on gains. Indexation benefit removed from July 2024. Simpler but may increase tax for properties held very long.
- 🏠TDS on NRI property sale remains 12.5%: Buyer must deduct 12.5% TDS (LTCG) or 30% (STCG) from sale amount and deposit to government before paying NRI seller.
- 📋No change in FEMA rules: NRIs can buy residential & commercial (not agricultural land). Purchase can be funded through NRE/NRO accounts or home loan from Indian bank.
- 🔄Repatriation: Sale proceeds of up to 2 properties can be repatriated. NRO to NRE transfer limit: USD 1 million per financial year (after tax clearance).
- 📉Section 54 exemption intact: NRIs can still claim exemption by reinvesting capital gains in a new residential property within 2 years (purchase) or 3 years (construction). Capped at ₹10 Cr.
✅ What NRIs Can & Cannot Buy
| Property Type | NRI/PIO/OCI | Foreign National |
|---|---|---|
| Residential Property | ✅ Yes | ❌ No |
| Commercial Property | ✅ Yes | ❌ No |
| Agricultural Land | ❌ No (needs RBI permission) | ❌ No |
| Plantation Property | ❌ No | ❌ No |
| Inherited Agricultural Land | ⚠️ Can hold, cannot purchase | ⚠️ Same |
💰 Tax Rules: NRI vs Resident
| Tax Component | Indian Resident | NRI |
|---|---|---|
| Stamp Duty | 6% (Maharashtra) | 6% (same) |
| Registration | 1% (max ₹30,000) | 1% (same) |
| GST (under construction) | 5% | 5% (same) |
| TDS on Sale | 1% if > ₹50L | 12.5% LTCG / 30% STCG |
| Capital Gains Tax | 12.5% LTCG / slab STCG | 12.5% LTCG / 30% STCG |
| Rental Income Tax | Slab rate | 30% flat (TDS by tenant) |
💡 Key difference: The biggest NRI impact is TDS — the buyer
withholds 12.5% of the entire sale value (not just the gain). You get refund after filing India
tax return. Get a Lower TDS Certificate (Form 13) to reduce this.
⚠️ TDS on NRI Property Sale — How It Actually Works
Buyer pays
→
Deducts 12.5% TDS
→
Deposits to Govt (Form 26QB)
→
NRI files ITR
→
Claims Refund
- 📋Form 13 (Lower TDS): Apply to AO before sale. If approved, TDS reduces from 12.5% of sale value to 12.5% of the actual gain only. Saves massive cash flow.
- ⏰Timeline: Apply Form 13 at least 2 months before sale. Processing takes 30-45 days.
📝 NRI Buying Process — Step by Step
- 1️⃣Open NRE/NRO Account: Payment must be through NRE, NRO, or FCNR accounts. No cash transactions allowed under FEMA.
- 2️⃣Get Power of Attorney (POA): If you can't be present, execute a POA from your country (attested by Indian Embassy/Consulate). Essential for registration.
- 3️⃣Home Loan: NRIs eligible for up to 80% LTV from SBI, HDFC, ICICI. Rate: 8.5-9.5%. Need Indian income proof or overseas income docs.
- 4️⃣Due Diligence: Same as residents — verify title, RERA, builder history. Use our Builder Report Card.
- 5️⃣Registration: Can be done by POA holder. Stamp duty and registration same as residents (6% + 1% in Maharashtra).
- 6️⃣File Form 2B (RBI): Within 90 days of purchase, file Form 2B with RBI through your bank.
📎 Documents Required
🛂 Indian Passport (valid)
📄 OCI/PIO Card (if applicable)
🏦 NRE/NRO Bank Statements
🆔 PAN Card (mandatory)
📋 Aadhaar (if available)
🏠 Overseas Address Proof
💼 Employment/Income Proof
📜 Power of Attorney (if applicable)
📷 Passport-size Photos
🏛️ Form 2B (post-purchase)
🔴 Selling Property as NRI
- ⚠️TDS is non-negotiable: Buyer MUST deduct TDS. If they don't, the buyer is liable. Many NRI deals fall through because buyers don't understand this.
- 💸Repatriation of sale proceeds: Up to 2 properties. Transfer NRO → NRE (up to $1M/FY). Need CA certificate (Form 15CB) and bank undertaking (Form 15CA).
- 📉Section 54 Exemption: Reinvest capital gains in new residential property within 2 years (buy) or 3 years (build). Or use Section 54EC — invest up to ₹50L in bonds.
- 📝File Indian Tax Return: Mandatory in the year of sale. Claim TDS refund if excess was deducted. Use CA in India.
🚫 Common NRI mistakes: Not applying for Form 13 (overpaying
TDS by lakhs), not filing Indian ITR (losing refund), using personal bank account instead of NRO
(FEMA violation), and not getting CA certificate for repatriation.
🌍 Double Taxation Relief (DTAA)
- 🇺🇸USA: India-US DTAA allows tax credit. Tax paid in India can be claimed as Foreign Tax Credit on US returns (Form 1116).
- 🇬🇧UK: Similar relief under India-UK DTAA. Capital gains taxed in India, credit in UK.
- 🇦🇪UAE: No income tax in UAE. Pay full tax in India only. No double taxation issue.
- 🇸🇬Singapore: India-Singapore DTAA provides relief. File in both countries, claim credit.
- 🇨🇦Canada: India-Canada DTAA applies. Claim Indian tax as credit in Canada.
💡 MPE NRI Services: We help NRIs with property
search, site visits (virtual & in-person), legal documentation, and post-purchase management. Over 200
NRI families served since 2002.