Capital Gains Tax explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
When an NRI sells property in India, capital gains tax applies and the buyer must deduct TDS. Here is how it works.
Tax and TDS
- Long-term gains (held over 24 months) are taxed at 20% with indexation (or 12.5% without, as applicable)
- Short-term gains are taxed at slab rates
- The buyer deducts TDS on the sale consideration (higher rates apply for NRIs)
Reducing the TDS
- Apply for a lower/nil TDS certificate (Form 13) from the Income Tax Department
- This ensures TDS is deducted on the gain, not the full sale value
Exemptions
NRIs can claim the same exemptions under Sections 54/54F/54EC by reinvesting in a house or specified bonds. Repatriation of sale proceeds is subject to RBI rules.
Frequently Asked Questions
How is an NRI taxed on property sale in India?
Long-term gains at 20% with indexation (or 12.5% without); short-term at slab rates.
Is TDS deducted when an NRI sells property?
Yes — the buyer deducts TDS, usually on the sale value unless a lower-TDS certificate is obtained.
Can an NRI reduce TDS on property sale?
Yes — by applying for a lower/nil TDS certificate (Form 13) so TDS is on the gain, not the full value.
Can NRIs claim capital-gains exemptions?
Yes — Sections 54, 54F and 54EC are available to NRIs.
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