The story
Priya bought a 2BHK in Gurugram’s Sector 82 in 2018 for ₹58 lakh before moving to London. She sold in March 2026 for ₹1.02 crore and expected to receive about ₹1 crore after expenses.
At registration, the buyer handed her a TDS certificate for ₹22,09,000 — 20% of the full sale consideration plus surcharge and cess, deposited with the Income Tax Department in her name. Priya received ₹79,91,000, not ₹1,02,00,000.
Why NRI property sales begin with an unwelcome surprise
The confusion starts with a common assumption: that TDS is deducted on the profit. That is how it works for resident Indians selling property above ₹50 lakh — the buyer deducts 1% of the sale amount. For NRI sellers, the rule is entirely different.
Under the Income Tax Act 2025 (Section 393(2), replacing Section 195 of the 1961 Act), any person paying a non-resident for the sale of property must deduct TDS at the applicable capital-gains rate — applied not to the gain, but to the FULL sale consideration. On a ₹1 crore sale: long-term (24+ months), the buyer deducts ~20–22% (₹20–22 lakh); short-term (under 24 months), ~30–35% (₹30–35 lakh).
What governs NRI property sales in 2026
| Holding period | Type | Tax rate on gain | Effective TDS on full sale |
|---|---|---|---|
| More than 24 months | LTCG | 12.5% — no indexation | ~20–22% (incl. surcharge + cess) |
| Less than 24 months | STCG | Individual slab (up to 30%) | ~30–35% (incl. surcharge + cess) |
2026 form-name change: from 1 April 2026, Form 15CA is renamed Form 145 (self-declaration by the NRI remitter) and Form 15CB is renamed Form 146 (CA certificate). Your bank will not process any international transfer of sale proceeds above ₹5 lakh without both. If your CA or bank still refers to 15CA/15CB, confirm they have updated to the 2026 nomenclature.
| Property type | Repatriation limit | Notes |
|---|---|---|
| Residential bought with NRE/FCNR funds as NRI | Full sale proceeds | Limit: 2 residential properties in a lifetime — 3rd onwards via NRO route |
| Bought with NRO funds or as a resident | Up to USD 1 million per FY from NRO | After payment of all taxes |
| Inherited property | Up to USD 1 million per FY | With will or legal-heir certificate |
| Agricultural land, farmhouse, plantation | Cannot be repatriated | Proceeds must remain in India |
Lower Deduction Certificate (LDC): under Section 197 of the ITA 2025, an NRI seller can ask the income-tax officer to direct the buyer to deduct TDS at the actual tax-applicable rate rather than the standard rate on the full sale value. For Priya, the actual LTCG tax was ~₹5.5 lakh; with an LDC the buyer deducts 6–7% of the sale price, versus 20–22% without. Apply 4–6 weeks before the sale date.
Priya vs Suresh — same property, very different settlement
Suresh’s CS applied for an LDC two months before registration; nobody applied for Priya’s sale. Same property, same price, same tax law — the difference is one application, filed 8 weeks before registration.
- ₹1.02 cr sale; buyer deducted at the standard rate
- TDS deducted: ₹22 lakh on the full price
- Received ₹80 lakh on registration day
- Waiting 9–14 months for a ~₹16 lakh refund
- Same property, same price
- LDC issued directing TDS at 6.5% of sale price
- Buyer deducted ₹6.6 lakh
- Received ₹93.4 lakh on registration day
How to actually start — 5 steps
- Confirm your holding period before agreeing a sale price. It decides LTCG (24+ months) vs STCG (under 24). If you are near the 24-month mark, waiting a few weeks before registering can shift you from 30% STCG to 12.5% LTCG. Calculate the acquisition and proposed registration dates first.
- Apply for an LDC at least 6 weeks before registration. File Form 13 online to your jurisdictional officer, with your PAN, NRI status, sale agreement, original purchase agreement and a CA-certified capital-gains computation. If granted, the LDC’s rate binds both the buyer and the department for that transaction.
- Ensure proceeds go to your NRO account. Under FEMA 20(R), all property sale proceeds must be credited to your NRO account before repatriation — not your NRE account, not a relative’s resident account, not directly overseas. Open one before the sale agreement is signed if you don’t have an active NRO account.
- Obtain Form 145 and Form 146 before requesting repatriation. For transfers above ₹5 lakh both are required before the bank processes the transfer. Start the CA certification (Form 146) at least 30 days before you need the money moved.
- File your Indian ITR for the year of sale. Mandatory for NRIs who sold property, even if TDS covers the full liability or results in a refund — and a necessary document for repatriation. Claim Section 54 (reinvestment within 2 years) or 54EC (notified bonds within 6 months) exemptions here to reduce your gains.
Your Indian property sale is a multi-step compliance event — getting the sequence right is what lets your money arrive in your overseas account intact.
Key takeaways
| Key compliance point | What you must do |
|---|---|
| TDS on NRI property sale is on the full sale price, not the gain | Apply for an LDC under Section 197 at least 6 weeks before registration |
| Form 15CA/15CB renamed Form 145/146 from 1 April 2026 | Confirm your CA and bank use the new names — old forms are no longer valid for 2026 transactions |
| LTCG is now 12.5% without indexation (effective 23 July 2024) | Compute gains without indexation — the indexation option is gone for properties sold after July 2024 |
| All sale proceeds must go to the NRO account before repatriation | Open or activate your NRO account before signing the sale agreement |
But here is the other side…
An LDC is not always the right move, and it is not always granted. The officer may reject or partially grant it if the gains computation is disputed, the acquisition documents are incomplete, or the standard rate is deemed appropriate. If the application delays the sale because the buyer won’t wait 4–6 weeks, the choice between the LDC and closing on time becomes a real commercial trade-off. For a time-sensitive sale, filing without an LDC and recovering the excess via refund may be more practical — the department pays interest on delayed refunds at 6% per annum from 1 April of the assessment year.
The TDS was never your money to lose
Priya’s ₹22 lakh sits in an income-tax account in India earning 6% interest. She will get most of it back — minus her ~₹5–6 lakh actual liability — within 9 to 14 months. But ₹15 lakh parked in a government account for over a year, when you needed it in London to pay down a mortgage, is not the same as ₹15 lakh in your hands on registration day. The LDC exists precisely to prevent this.
WeConsult India advises NRI clients in the UAE, UK, USA, Singapore and Australia on property-sale compliance — LDC applications, capital-gains computation, Form 145/146 preparation, NRO account setup and ITR filing. If you are planning a property sale in India in the next 3–6 months, reach out now — 6 weeks before registration is the window that matters.
Stay compliant. Stay protected. — WeConsult India