NRI Taxation · Frequently Asked Questions
Frequently Asked Questions Realated to sale of property by NRIs
Twelve common questions every NRI seller asks before, during, and after closing a property sale in India.
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Quick Reference
Click any question below to reveal the answer. Each topic is self-contained — read in any order.
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12
Questions
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1 I am an OCI cardholder. Am I considered an NRI for tax purposes?
Tax status depends on residential status under the Income Tax Act, not on citizenship or OCI status. The Residential Status would be determined by no of days spent in India during the financial year.
2 What if my actual capital gain is zero or even a loss will TDS be applicable if I am NRI.
Yes even if the actual capital gain is zero or even a loss TDS would be applicable.
3 What can I do so that TDS is not Deducted in that case.
Apply for a NIL deduction certificate in Form No. 128. The Assessing Officer can issue a certificate authorising the buyer to deduct no TDS at all. You will need to demonstrate the loss with full supporting documentation.
4 Can the LDC be issued for a higher rate than I requested?
Yes The AO has discretion. If he disagrees with your capital gains computation, he may issue a certificate at a higher rate than you asked for. You can respond to the AO’s queries to justify your figure, but the final rate is at his discretion.
5 What if my buyer refuses to wait for my Lower Deduction Certificate?
If your refuses to wait for Lower Deduction certificate then the buyer will deduct TDS on the gross consideration. You will need to claim the excess of Tax Paid as refund through your ITR. The refund is usually processed with 15 days to 6 months after filling of the Income Tax Return.
6 What is the Rate of TDS?
For NRIs selling property in India (as of FY 2026-27), TDS is generally deducted at 12.5% for long-term capital gains or 30% for short-term capital gains.
Plus applicable surcharge and 4% cess. TDS is applied to the total sale consideration if Lower Deduction Certificate is not applied and received.
7 How do I kwon is the Gain Long term or Short Term?
If you held the property for 24 months or less it is considered as Short-Term Capital Gain (STCG)
If you held the property for more than 24 months it is considered as Long-Term Capital Gain (LTCG)
8 Do I need to file an ITR in India after the sale?
Yes As a NRI who has sold immovable property in India during a financial year must file an Indian ITR (typically ITR-2) by 31 July of the following year to report the capital gain.
9 Can I get refund if I file Income Tax Return?
In case the TDS is being deducted at the Gross Value you might get refund from Income Tax, the same can be ascertained once the computation of income is prepared.
10 Can I claim Section 54 exemption by buying another property abroad?
No Section 54 / 54F exemption requires reinvestment in a residential property in India. Foreign property does not qualify.
11 What if the buyer is also an NRI?
TDS obligation still applies (Section 393(2) is agnostic to the buyer’s residential status).
12 How long is the LDC valid?
For the specific transaction with the specific buyer named in the certificate. It is not transferable to a different buyer. If the transaction does not close within the stipulated period, a fresh certificate may be required.
Still have questions?
Every NRI property transaction has its own nuances.
If your situation does not fit neatly into one of these twelve answers, please reach out to a qualified Chartered Accountant for advice tailored to your specific facts.
Disclaimer: This article is intended for general information only and reflects the law as it stands on the date of publication. It does not constitute tax or legal advice. Readers are advised to consult qualified Chartered Accountants and tax advisors before taking any decisions on the matters discussed.