Detailed Analysis of Sale of Property by a Non-Resident Indian (NRI)

We have often seen there has been a lot of queries and confusion when there is sale of any property in India which is owned by a Non-Resident Individual who are commonly known as NRI. Through this article we will be trying to provide answers for all the questions related to tax applicability in case of Sale of Property by an NRI in India.

Capital Gains Taxation on Sale of Property by NRI

The Profit earned on sale of property is known as Capital Gains. Anybody who sells their house property which is in India needs to pay Income Tax on the amount of Capital Gain. In short, Capital Gains is difference between Sales Price and Indexed Purchase Price of the Property. The tax rate at which the seller needs to pay Income tax depends upon the tenure for which the person was owner of the said property. The Capital Gains can be Short Term Capital Gains and Long Term Capital Gains.

Long term Capital Gains occurs when the property is sold after 2 years of Purchase. If sold before 2 years then it is Short Term Capital Gain. In case the property has been inherited from your ancestors, consider the date of purchase as date when purchase is made by the original owner for calculating whether it’s a long term or a short-term capital gain.

Tax Rate on Capital Gain is as follows:

Capital GainTax Rate
Short Term Capital GainAs per Slab Rates
Long Term Capital Gain20%

Rate of TDS deductible from Sales Consideration:

In case of sale of property by NRI, the buyer needs to deduct TDS @ 20%. In case the property has been sold before 2 years a TDS the rate 30% shall be applicable.

Tax Saving Methods in case of NRI:

NRIs can claim exemption under Section 54 & Section 54EC on long term capital gains from sale of house property in India in order to save tax only on Long Term Capital Gain.


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