Every NRI who buys a beachfront villa on the Karavali coast is really making two decisions on the same day. The first is the property decision — the plot, the CRZ zone, the title, the price, the framework in our decision guide for Karavali beach property. The second is the exit decision — what happens on the day you eventually sell this villa and want the proceeds in your own bank account, in your own country.
Most buyers focus on the first and figure the second will sort itself out. It doesn’t. The seven questions below are what your banker, your Chartered Accountant, and the Reserve Bank of India will ask on repatriation day. Answering them coldly, at the point of sale, in a hurry, from another country, is a hard exercise. Answering them deliberately, at the point of purchase, before you sign anything, is a much easier one.
We advise NRI buyers across Udupi, Kundapur, Byndoor and the Karavali coast every month, and this is the sequence we walk them through. None of this is legal or tax advice — every case turns on your specific residency, your tax jurisdiction and the exact regulatory position at the time. It is the framework of questions to take to your CA and your banker.
Question 1 — How was the property originally paid for?
The single most consequential question. Two paths exist:
- Inward remittance route: the purchase was funded from your NRE or FCNR account, or via a fresh inward remittance through banking channels. Under FEMA the sale proceeds are fully repatriable up to the original amount remitted, in freely convertible foreign exchange.
- Rupee funds route: the purchase was funded from your NRO account, or from Rupee income earned in India. Under FEMA these proceeds are repatriable up to the USD 1 million per financial year cap (see Question 6), but not on the “return of original capital” logic.
If you are buying today, insist on the inward remittance route. Wire the funds from your account outside India to your NRE or FCNR account, then to the seller. Keep every FIRC (Foreign Inward Remittance Certificate) your bank issues. The repatriation-day version of you will thank the purchase-day version of you.
Question 2 — What is your NRI status under FEMA at the time of sale?
Your residential status under FEMA can change between the day you buy and the day you sell. A person who buys a villa as an NRI in year 1, later spends enough time in India, and becomes a Resident under FEMA in year 8, faces a different repatriation profile in year 10 than someone who remained NRI throughout.
The test at the time of sale is not “were you an NRI when you bought” — it is “are you an NRI now, at the point of the transaction”. Confirm your current classification with your Chartered Accountant well before you list the villa for sale, not while a buyer is negotiating.
Question 3 — How much TDS will be deducted at the sale?
Under Section 195 of the Income Tax Act, a resident buyer purchasing property from a non-resident seller is required to deduct tax at source (TDS) on the entire sale consideration, not just on the gain. The applicable rate depends on whether the gain is long-term or short-term.
For a long-term capital gain (property held more than 24 months), the TDS rate is currently 20% on the sale consideration, subject to a surcharge and cess. For a short-term capital gain, TDS is at the applicable slab rate.
You can apply to the Assessing Officer for a lower or nil TDS certificate under Section 197 if your actual tax liability is expected to be substantially lower. This takes 4–8 weeks to obtain and requires meaningful paperwork. Start the Section 197 process before the sale, not after — trying to reclaim excess TDS through the income tax refund cycle after the fact is a much slower path to your money.
Question 4 — Do you have the 15CA / 15CB CA certification ready?
Any remittance of sale proceeds from India to your overseas bank account requires two forms:
- Form 15CB — a certificate issued by a Chartered Accountant confirming that the applicable Indian taxes have been paid or accounted for on the amount being remitted.
- Form 15CA — a declaration filed by the remitter (you) with the income tax department, referencing the 15CB.
No bank will process a repatriation of NRI sale proceeds without these two forms in hand. The 15CB in particular is a professional certification — pick a CA who has done NRI property repatriations before, ideally one your banker knows and will accept without back-and-forth.
Question 5 — Is this a long-term or short-term capital gain?
Immovable property is treated as a long-term capital asset if held for more than 24 months. Below that, it’s short-term. The distinction matters because:
- Long-term gains are taxed at 20% with indexation benefit (or 12.5% without indexation, at the taxpayer’s option post the Finance Act 2024 revisions). Certain exemptions under Section 54, 54F, 54EC are available if you reinvest the proceeds into specified assets within specified windows.
- Short-term gains are added to your total income and taxed at the applicable slab rate — significantly higher for most NRIs than the long-term rate.
For a Karavali villa purchased today, this means sale before month 24 = short-term. Buying with a shorter than 3-year hold in mind is a decision with a specific tax consequence attached.
Question 6 — Have you hit the USD 1 million annual repatriation cap?
For sale proceeds from the Rupee funds route (Question 1) — and for balances in your NRO account more generally — FEMA permits repatriation of up to USD 1 million per financial year, cumulatively across all sources. This is not per property. It is the total cap on remittances out of your NRO account in a single year.
If you have other NRO balances (rental income, inheritance, other Indian income) you plan to repatriate in the same year, the villa sale proceeds count against the same cap. Time your repatriations across financial years accordingly.
Sale proceeds from the inward remittance route (again, Question 1) are not subject to this cap up to the original remitted amount, only to documentation.
Question 7 — Does your country of residence have a DTAA with India?
India has Double Taxation Avoidance Agreements with more than 90 countries. If your country of residence has a DTAA, you can typically claim credit for the Indian tax paid against your local tax liability, and vice versa, so the same capital gain is not taxed twice.
The mechanics vary by treaty. A US resident invoking the India-US DTAA follows a different process than a UK resident under the India-UK treaty. Get your local tax adviser (in your country of residence) to confirm the treaty position on Indian property capital gains before you finalise the sale. If you’re going to need a Tax Residency Certificate from your local tax authority to claim treaty relief, that certificate has its own lead time.
The three things this article is not
Not legal or tax advice. Every case turns on your specific residency status, your income structure, your local tax jurisdiction and the exact regulatory position at the time of your sale. Regulations change. Rates change. This article is the framework of questions to take to your professional adviser — Chartered Accountant on the Indian side, tax adviser on the residence-country side, and your banker.
Not a discouragement from buying. All seven questions have workable answers when planned for. The Karavali coast has attracted NRI buyers for years and will continue to, and coastal-district property has real long-term merit as an NRI portfolio piece. The point is to make the exit decision on the purchase day, not on the sale day.
Not exhaustive. There are secondary considerations — Aadhaar-PAN linkage, KYC on the NRO account, the property card / khata trail, source-of-funds documentation for large first-time transfers — that a good CA will walk you through as they come up. The seven above are the ones you cannot afford to leave to the CA to spot for you.
If you’re an NRI serious about a Karavali beachfront villa and would like a curated shortlist that already accounts for the repatriation profile — including exclusive off-market inventory that never reaches this site — get in touch below.
