NRI Taxation & Repatriation

Please read first: Tax rules change every year through the Union Budget and new notifications. The Income-tax Act, 2025 has replaced the Income-tax Act, 1961 with effect from 1 April 2026, and section numbers have been renumbered; this guide uses the long-familiar section references (195, 197, 54, 54EC and so on) because most people, banks and advisers still recognise them. This page describes the rules in general terms only. Always consult a qualified chartered accountant before you rent out, sell or repatriate - the right answer depends on your residential status, the dates involved and any tax treaty that applies to you.

1. Tax on rental income

Rent from a property in India is taxable in India, whatever your residential status.

• TDS by the tenant: a tenant paying rent to an NRI landlord must deduct tax at source (TDS) under Section 195 - at 30% plus applicable surcharge and health & education cess - and deposit it with the government. The tenant needs a TAN to do this. This applies regardless of the amount of rent.
• Computing taxable rent: municipal taxes paid are deductible, and a standard deduction of 30% of the net annual value is allowed for repairs and upkeep. Interest on a home loan for a let-out property is also deductible, subject to limits on setting off a resulting loss.
• Filing a return: because TDS is deducted at a flat rate, the tax withheld is often more than the actual tax due. Filing an Indian income-tax return lets you claim a refund of any excess.
• Lower TDS: you can apply to the tax department for a certificate for lower or nil deduction (see Form 13 below) and give it to your tenant.

Rent is usually credited to your NRO account. Current income such as rent can be remitted abroad after payment of applicable taxes, typically with Form 15CA and, where required, a CA certificate in Form 15CB.

2. Capital gains when you sell

Short-term vs long-term

For land and buildings, a gain is long-term if you held the property for more than 24 months before selling, and short-term otherwise.

• Short-term capital gains (STCG) are added to your other Indian income and taxed at the normal slab rates.
• Long-term capital gains (LTCG) are taxed at a special rate.

The July 2024 change

The Union Budget of July 2024 changed how LTCG on property is taxed for transfers on or after 23 July 2024:

• The LTCG rate became 12.5% without indexation (previously 20% with indexation, which allowed the purchase cost to be adjusted upwards for inflation). Surcharge and cess apply on top.
• After representations, a grandfathering option was introduced for property acquired before 23 July 2024: the taxpayer may compute tax under both methods (12.5% without indexation, or 20% with indexation) and pay the lower amount. This option is available only to resident individuals and HUFs - not to NRIs. NRIs selling property pay 12.5% without indexation on long-term gains.

Because indexation is no longer available to NRIs, the taxable gain on a property held for many years can be higher than under the old rules. Model the numbers with your CA before you agree a sale price.

3. TDS when an NRI sells: Section 195

• When the seller is an NRI, the buyer must deduct TDS under Section 195 (not the 1% under Section 194-IA that applies to resident sellers). The buyer needs a TAN, deposits the tax and issues a TDS certificate to the seller.
• TDS is due on the taxable capital gain, at the rate applicable to that gain plus surcharge and cess. In practice, unless the seller produces a certificate from the tax department, buyers often deduct on the full sale consideration because they cannot determine the gain themselves - which can lock up a large amount until you file your return and claim a refund.
• Lower deduction certificate (Form 13): the NRI seller can apply online to the Assessing Officer under Section 197 using Form 13, with details of the purchase cost and expected gain. If granted, the buyer deducts TDS only at the lower rate or amount stated in the certificate. Apply well before the sale date - processing takes time.

4. Saving tax on long-term gains: Sections 54, 54EC and 54F

• Section 54 - if you sell a residential house and make a long-term gain, you can claim exemption by investing the gain in one residential house in India: bought within 1 year before or 2 years after the sale, or constructed within 3 years. The exemption is capped (currently at ₹10 crore of gain). Subject to conditions, a one-time option allows investment in two houses where the gain does not exceed ₹2 crore.
• Section 54EC - invest the long-term gain from land or a building in specified bonds (such as those issued by NHAI, REC, PFC or IRFC) within 6 months of the sale, up to ₹50 lakh in a financial year, with a 5-year lock-in.
• Section 54F - similar relief where the asset sold is not a residential house, if the net sale consideration is invested in a residential house, subject to conditions.
• Capital Gains Account Scheme - if you have not reinvested by your return due date, the unutilised amount can be deposited in a capital gains account with a bank to preserve the exemption.

Lock-in periods and conditions apply; selling the new asset early can reverse the exemption.

5. Double Taxation Avoidance Agreements (DTAA)

India has tax treaties with most countries where NRIs live. Income from immovable property and gains from selling it are generally taxable in the country where the property is located (India), and your country of residence then usually gives relief - for example a credit for the tax paid in India. To claim treaty benefits in India you typically need a Tax Residency Certificate (TRC) from your country of residence and Form 10F. Note that the UAE and some other Gulf countries do not levy personal income tax, so the interaction is different. A CA familiar with both countries can help you avoid paying twice.

6. Repatriating money abroad

Sale proceeds of property bought with foreign exchange

If you bought the property in accordance with FEMA, using inward remittances through banking channels or funds from your NRE/FCNR(B) account (including a home loan repaid from these sources), you can repatriate the sale proceeds - up to the amount originally paid in foreign exchange - for up to two residential properties. Keep FIRCs or bank certificates for every payment to prove the source of funds.

Proceeds from rupee funds, inherited property and other balances

Sale proceeds of property bought from rupee funds (for example from your NRO account), inherited property, or amounts above the foreign-exchange portion are credited to your NRO account. NRIs and OCIs can remit up to USD 1 million per financial year from NRO balances (including such sale proceeds), after payment of applicable taxes.

Paperwork

• Form 15CA - an online declaration filed by the remitter on the income-tax portal.
• Form 15CB - a certificate from a chartered accountant confirming the nature of the remittance and that tax has been paid, required in many cases.
• Supporting documents for the bank: sale deed, purchase documents and payment proofs, TDS certificates, and for inherited property, documentary evidence of inheritance.

Quick summary

Again - please consult a qualified chartered accountant before acting. We are happy to introduce you to independent tax professionals who work with NRIs. Contact us.