‘TDS on Property Sold by an NRI Under ‘FEMA’

tax deducted at source on property sale by NRI
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In the 19th century, Indians started to migrate to the USA. Tremendous opportunities arose in the mid 20th century, which led to the large-scale migration from India to the US. Indian migrants constitute 6 % of the US population, and the Indian community is the second-largest foreign-born population after Mexico. The total population of Asian Indians in the USA is 29 Lakh and the fastest-growing ethnic group in the US. 


NRI repartition

This is a process of transferring the fund by an NRI from their accounts (NRE/NRO/FCNR (B)) in India to their bank account in the country where they presently reside. A US NRI can sell his property (immovable assets) in India. An NRO account is mandatory for those who sell the property. Sales proceed to be deposited in the NRO account. Principal plus interest can transfer from the NRO account to their overseas account. USD 1 million can move in a financial year. 


Documents needed for sale

  1.  The title of the property should be in the name of Seller
  2.  No objection certificate
  3.  Occupation certificate
  4.  Pan card
  5.  Property tax receipts


US citizen – the owner of the property

A US citizen became the owner of the property either through inheritance or bought before attaining NRI status or purchased property after achieving the NRI level.


TDS on property sold

All property-related transactions in which NRI is involved should be under the Foreign Exchange Management Act. An NRI can sell his residential or commercial property to a Resident Indian, PIO, or another NRI. But, NRI cannot sell his agricultural land, farmhouse, or plantation property to an NRI or PIO.



Under the revised rules in India, if a property is sold after two years from its acquisition, NRI has to pay 20% plus applicable surcharge and cess on sale amount as long-term capital gains (LTCG) tax. If a property is sold before that period, NRI must pay 30 % plus applicable surcharge and cess on the money earned as profit short-term capital gains (STCG) tax. NRIs can claim rebates on LTCG under the various sections of IT law. 



The person who buys the property from an NRI is required to deduct TDS on taxable capital gains on the sale of immovable property.


Repartition of Sales Proceeds

Following points to be taken care of:- 

  1. The amount should be credited to the NRO account
  2. Get 15 A and 15 CB from a Chartered Accountant in India
  3. Sale documents or the Will of the inherited property
  4. You can transfer only USD 1 Million to your US account in a year.
  5. Approval from RBI is needed if you want to send more than USD 1 Million.


Final thoughts

It is advisable to consult with a local tax consultant or a Chartered accountant in India to know more about the tax implications regarding property sale and the repatriation of the sale proceeds. It is better to contact a Unimoni branch nearby. 

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