NRI Taxation and Compliance (Part 3): Property in India – Buying, Renting, Selling and Repatriation
NRI property rules in India: what NRIs can buy, FEMA payment rules, rental TDS, capital gains and TDS on sale, lower deduction certificate and repatriation.
An NRI in Singapore wants to buy a flat near Kokapet, rent it out and sell in five years. At each stage a different rule applies: FEMA at purchase, tax at rental, TDS at sale and a cap at repatriation. Planning all four stages upfront avoids expensive surprises.
- Part 1: Residential status
- Part 2: Income taxation
- Part 3: Property (you are here)
- Part 4: Banking and investments
- Part 5: Returning to India
- Part 6: Investing in Indian businesses
- Part 7: Gifts, inheritance and succession
- Part 8: TDS, Section 195 and Forms 15CA/15CB
- Part 9: Return filing, refunds and notices
1. Buying: FEMA rules
| Question | Position |
|---|---|
| Can an NRI buy a flat or commercial space? | Yes, residential and commercial property, without limit on the number of properties |
| Agricultural land, plantation, farm house? | Cannot be purchased; can be inherited or received as a gift from permitted relatives (confirm conditions) |
| How to pay? | Inward remittance through banking channels or funds from NRE, NRO or FCNR(B) accounts; not cash or travellers cheques |
| Who is the buyer under tax and FEMA? | Check residential status for both; see Part 1 |
| Home loan? | Indian banks lend to NRIs against property, subject to bank policy and repatriation conditions |
2. Holding and renting
- Rental income is taxable in India. Tenants deduct TDS on rent paid to an NRI (typically at 30% plus surcharge and cess; confirm), so ask the tenant to deduct correctly and file a return to claim the standard deduction and refund of excess TDS.
- Rent is credited to an NRO account and can be repatriated within the NRO USD 1 million limit after tax.
- Property tax, maintenance and municipal dues remain payable.
3. Selling: tax and TDS
| Item | Rule (indicative; confirm for the year of sale) |
|---|---|
| Long-term holding period | More than 24 months for immovable property |
| LTCG rate on property | 12.5% without indexation for transfers after 23 July 2024 (confirm any option for earlier purchases) |
| STCG | Taxed at applicable slab rates |
| TDS by the buyer on LTCG | About 12.5% plus surcharge and cess on the gain; on the whole sale price if no certificate is obtained |
| Lower deduction certificate | Apply to the Assessing Officer to reduce TDS to the actual tax |
| Exemptions | Reinvest in a residential house (Section 54 equivalent) or in specified bonds (Section 54EC equivalent, within 6 months, up to Rs 50 lakh) (confirm under the Income-tax Act, 2025) |
ComplianceKart handles title review, lower deduction certificates, TDS compliance, Form 15CA/15CB and repatriation. See our FEMA and NRI compliance service.
4. Repatriating the proceeds
For property bought with foreign funds, repatriation of sale proceeds is generally permitted subject to FEMA conditions, including a limit on the number of residential properties for which proceeds can be repatriated (confirm current limit). Read the full worked example in our NRI property sale guide.
5. Mistakes NRIs make
- Paying part of the price in cash or by an unauthorised route.
- Buying agricultural land or a farm house by oversight.
- Not applying for a lower deduction certificate and losing cash flow.
- Failing to file the return after sale.
- Forgetting Form 15CA/15CB when remitting abroad.
- Leaving a broad power of attorney with no accountability.
Why work with ComplianceKart
ComplianceKart is a boutique practice bringing Chartered Accountants, Company Secretaries and advocates under one roof. Think of a multi-speciality hospital: the physician, the radiologist and the pharmacist read from one patient file, so you never carry reports between buildings. NRI property work covers FEMA, tax, title and bank documentation together. When one team handles them, the sale proceeds reach your account sooner.
Frequently Asked Questions
Can an NRI buy agricultural land?
No. NRIs and OCIs cannot purchase agricultural land, plantation property or a farm house.
Is TDS deducted when an NRI sells property?
Yes. The buyer deducts TDS on the gain or the sale price, and a lower deduction certificate can reduce it.
How much can an NRI repatriate?
Up to USD 1 million per financial year from the NRO account after tax, with Form 15CA/15CB.
Is rent taxable for an NRI?
Yes, rent from Indian property is taxable in India, and tenants deduct TDS.
Which long-term capital gains rate applies?
12.5% without indexation for transfers after 23 July 2024; confirm for your case.
Sources
- FEMA Non-debt Instruments Rules, 2019 and RBI directions on immovable property
- Income-tax Act, 2025 / 1961: capital gains, TDS on payments to non-residents
- RBI Master Direction on remittance of assets
Ready to act? Start with our FEMA and NRI compliance service, check pricing, or contact us.
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Educational article, last updated 11 November 2026. General information, not advice on a specific case. Laws and due dates change; confirm on the date you act. Items marked (confirm) came from secondary sources and need checking against the official text.
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