Selling Indian property as an NRI
Selling as a non-resident is materially different from selling as a resident, and the differences are concentrated in tax withholding and repatriation rather than in finding a buyer. Handled in the right order it is straightforward. Handled in the wrong order, a large share of your sale proceeds sits with the tax department for a year.
The withholding is the central issue
When a buyer purchases from a non-resident seller, they must deduct tax at source at rates that apply to non-residents, which are substantially higher than the modest rate applying to a resident seller.
Critically, the deduction generally applies to the sale consideration rather than only to your gain. On a property held for many years where much of the price is your original cost, that can mean a very large sum withheld against a much smaller actual liability.
You recover the excess by filing a return and claiming a refund, which means waiting until the assessment cycle completes. That is money unavailable to you for a considerable period.
This single mechanic is the reason NRI sales need planning that resident sales do not.
- Higher withholding rates apply to non-resident sellers
- Deduction is generally on consideration, not on the gain
- Excess is recovered only by filing and waiting for a refund
- This is the difference that requires planning
The lower deduction certificate
The remedy is to apply to the tax authorities for a certificate authorising deduction at a lower rate, based on your actual computed gain rather than the gross consideration.
Where granted, the buyer deducts against that certificate and the excess never leaves your hands, which is a far better position than recovering it later.
The application takes time and requires supporting computation, so it must be started well before the sale completes rather than once a buyer is waiting.
This is the single highest-value step in an NRI sale, and the one most often skipped by sellers who did not know it existed until the deduction happened.
What the buyer needs from you
Buyers purchasing from a non-resident carry the withholding obligation personally, and getting it wrong creates a liability for them rather than for you. Well-advised buyers are therefore careful.
Expect to be asked to confirm your residential status in writing, and expect a buyer's lawyer to verify it rather than accept an assurance.
Some buyers are wary of NRI transactions for this reason, which can narrow your pool. Being organised, providing the lower deduction certificate early and making the process easy is a genuine commercial advantage.
Our note on selling your flat covers the rest of the sale process, which is otherwise the same.
- The buyer carries the withholding obligation personally
- Expect written confirmation of status and verification
- Some buyers avoid NRI sales, narrowing your pool
- Being organised is a commercial advantage, not just admin
Capital gains and the exemption routes
The capital gains position broadly follows the same structure as for a resident, with holding period determining treatment and reinvestment routes available. Our guide to capital gains on a property sale covers the framework.
The reinvestment exemptions are available to non-residents subject to conditions, which is worth knowing because sellers sometimes assume they are not.
Where you intend to reinvest but the timing crosses a filing deadline, the capital gains account mechanism applies as it does for residents, and missing it forfeits the exemption.
Double taxation relief may apply depending on your country of residence, and our note on DTAA for NRI buyers covers how those agreements interact.
Getting the money out
Repatriation of sale proceeds is permitted subject to conditions and limits, and the position depends on how the property was originally acquired and from which account.
Proceeds generally route through your NRO account, and repatriation from there follows a defined procedure with documentation and certification requirements.
Our guide to repatriating real estate funds covers the mechanics, and the practical point is that this is procedural rather than discretionary: done correctly it works, done casually it stalls.
Plan the account structure and the repatriation route before the sale rather than afterwards, in the same way our NRI home loan guide recommends for a purchase.
Power of attorney and being absent
Most NRI sales involve a power of attorney, since registration requires presence that a seller abroad cannot easily provide.
It must be properly attested in your country of residence and then stamped and registered in Maharashtra to be effective, and errors here are the most common cause of a transaction stalling at the registration stage.
Draft the scope carefully. A power of attorney to sell property is a significant document, and the holder should be someone you would trust with the proceeds as well as the paperwork.
Our note on power of attorney for NRI buyers in Maharashtra covers the requirements, which apply equally on a sale.
- Attestation abroad, then stamping and registration here
- Errors in the document stall transactions at registration
- Draft the scope carefully and choose the holder with care
The sensible sequence
Compute your expected gain and apply for the lower deduction certificate before marketing the property, because the application takes time you will not have later.
Arrange the power of attorney in parallel, since attestation abroad is slow and it is the other item that delays completion.
Assemble the document set: the chain of agreements, society records, tax receipts and the CIDCO position where applicable.
Then sell in the ordinary way, with the tax and repatriation groundwork already done. NRI sales that go badly almost always went badly because these three items were started after a buyer was found rather than before.
