Selling Property in India as an NRI in 2026
TDS, Capital Gains, Form 128 and Repatriation

An NRI property sale has four separate compliance questions: how the gain is computed, how much the buyer must withhold, whether a lower or nil deduction certificate should be obtained before payment, and how the net proceeds can later be remitted abroad. Treating these as one question is the main reason transactions are delayed or excess tax remains blocked until return processing.

The legal and tax sequence should be settled before the agreement fixes the payment schedule. The buyer's withholding obligations, the seller's exemptions and the authorised dealer bank's remittance requirements must all be supported by the same title, consideration and banking record. This falls within NRI property sale, purchase and registration work, coordinated alongside title search and due diligence.

Confirm Tax Residence for the Year of Sale

The seller's passport or OCI status does not by itself determine income-tax residence. Residence is tested under the applicable Income-tax Act for the relevant tax year. The buyer, tax adviser and bank will usually require PAN, passport, visa or overseas-residence evidence and the exact ownership details before the withholding and remittance path can be finalised.

Determine Whether the Gain Is Long-Term or Short-Term

Immovable property held for more than 24 months is generally treated as a long-term capital asset; a shorter holding period generally produces short-term capital gain. The computation then considers the sale consideration or applicable stamp-duty value, acquisition cost, eligible improvement and transfer expenses, inherited-property rules, and any exemption lawfully claimed.

For transfers on or after 23 July 2024, the current base rate on qualifying long-term capital gains is generally 12.5 percent without indexation, subject to surcharge and cess. An NRI seller should not assume access to the resident-only grandfathering comparison that may allow 20 percent with indexation for specified older immovable property. The exact computation must be made for the seller's status and transaction date.

Short-term capital gain is generally taxed at the applicable rate for the taxpayer. The final liability can differ materially from the amount initially withheld by the buyer.

Understand the Buyer's Withholding Obligation

A resident-property purchase from a resident seller is governed by the specific resident-seller provision. A payment to an NRI seller is governed by the non-resident withholding framework, historically discussed as section 195 and now reflected in the 2025 Act framework. Tax is required to be deducted at the applicable rate on the sum chargeable to tax, together with surcharge and cess where applicable.

In practice, a buyer often lacks the information or authority to determine the precise taxable component and may propose deduction from the gross payment at a conservative rate. That can produce withholding far above the seller's final tax. The solution is not an informal promise by the buyer; it is advance computation and, where appropriate, an official lower or nil deduction certificate.

Form 128: Lower or Nil Deduction Before the Transaction

Form 128, which replaces the earlier Form 13 under the Income-tax Act, 2025, is the application for a certificate authorising lower or nil deduction. It is optional, but it must be pursued before the transaction or payment on which tax is to be deducted. Once the relevant withholding event is complete, the application cannot retrospectively repair that deduction.

The application requires a defensible estimate of income and tax, PAN and supporting documents. A property sale file commonly includes the acquisition and sale documents, ownership and holding-period evidence, cost and improvement records, computation of gain, details of the proposed buyer and payment, and evidence of any exemption or reinvestment relied upon. The assessing authority determines whether and on what terms a certificate is issued.

Exemptions and Reinvestment Planning

Long-term capital gains may qualify for exemptions such as reinvestment in a residential property or specified bonds, subject to the applicable provision, asset, amount, time limit and other conditions. These exemptions should be examined before the sale because the agreement, receipt schedule and use of funds can affect compliance. Capital Gains Account Scheme requirements may also arise where the reinvestment is not completed before the return deadline.

A blog cannot determine whether an exemption applies to a particular NRI, inherited asset, joint sale or multiple-property plan — see our note on the sale of inherited property by an NRI. The computation should be prepared by the tax adviser and aligned with the conveyance and banking documents.

The Buyer-Side Procedural Change From 1 October 2026

A statutory simplification is scheduled from 1 October 2026 for a resident individual or Hindu undivided family purchasing immovable property from a non-resident: the buyer will not be required to obtain a TAN solely for that deduction and will use the prescribed statement and payment mechanism. Transactions before the effective date remain governed by the then-applicable procedure. The team handling the sale should verify the live form and portal process on the payment date rather than relying on an old checklist.

Repatriation Is a Separate FEMA and Banking Process

Payment of Indian tax does not automatically make the proceeds freely remittable. The applicable FEMA route depends on the property, how it was acquired, the source of acquisition funds, the account into which proceeds are credited, the seller's status and prior remittances. Sale proceeds are commonly credited to an NRO account, after which the authorised dealer bank examines the remittance-of-assets or other applicable route.

A route of up to USD 1 million per financial year may be available for specified NRO balances or assets, subject to the regulatory conditions, documentary evidence, tax compliance and authorised dealer bank scrutiny. Separate rules can apply where property was acquired with foreign exchange through eligible channels. The bank should confirm the route before the sale proceeds are fragmented or moved between accounts.

Forms 145 and 146 for Outbound Remittance

Form 145 replaces the earlier Form 15CA for information concerning specified payments or remittances to a non-resident or foreign company. It contains different parts depending on taxability, amount and whether an assessing-officer certificate exists. Form 146 replaces the earlier Form 15CB and is the chartered accountant's certificate used for qualifying taxable remittances exceeding the prescribed aggregate threshold where Part C of Form 145 applies.

These are Income-tax forms used alongside the FEMA and authorised-dealer bank process; they are not "FEMA forms," and Form 146 is not required for every remittance. The bank, chartered accountant and legal team should identify the correct part and supporting file for the actual transfer.

The Practical Pre-Sale Sequence

Documents Commonly Required

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  Identity and residence proof — PAN, passport, visa/overseas residence evidence and Indian bank-account details.
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  Title chain — current title deed, acquisition deed and complete ownership chain.
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  Succession records — inheritance, probate, succession, gift, partition or family-settlement documents where relevant.
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  Transaction papers — proposed agreement, buyer details, payment schedule and stamp-duty valuation.
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  Cost evidence — cost, improvement and transfer-expense evidence.
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  Encumbrance records — existing loan, release and encumbrance documents.
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  Tax certification — provisional tax computation, Form 128 papers and any assessing-officer certificate.
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  Remittance file — TDS certificates, tax-return evidence and bank documents for later remittance.

Which Professional Handles Which Part?

Tax computation and certification remain within the appropriate professional role; the legal team coordinates the transaction documents and timetable with the client's chartered accountant and authorised dealer bank.

Paid NRI Property Sale Tax and Repatriation Planning

Conclusion

Frequently Asked Questions

Why This Sale Needs Coordinated Legal, Tax and Banking Advice

Every step above looks straightforward on paper and becomes complicated in practice — an unfiled Form 128, an over-withheld TDS, or proceeds moved before the FEMA route is confirmed can block funds until return processing: