The Indian tax and foreign exchange regime for NRI property sales has three moving parts: the tax deduction at source (TDS) that the buyer applies when paying you, the repatriation limits and process that determine how much you can send abroad and when, and the reporting obligations to the RBI, the tax department, and your bank. Get any of these wrong and the money either does not leave India, leaves at a much higher effective tax cost, or leaves in a way that creates future compliance liability. This guide walks through each part in order.
The rules described here reflect the FEMA regulations and Income Tax Act provisions in force as of mid-2026. They are stable in their broad structure but can change in the annual budget. For any transaction above ₹2 crore, confirm the current position with a FEMA-competent Chartered Accountant before you commit. For sub-₹2 crore transactions, the process below is standard practice.
The USD 1 Million Per Year Repatriation Limit — How It Actually Works
NRIs and Persons of Indian Origin can repatriate up to USD 1 million per financial year from India, from balances held in NRO (Non-Resident Ordinary) accounts, to their foreign bank account or NRE account. Property sale proceeds fall under this limit. The USD 1 million is a per-person limit, not a per-transaction limit, and it resets on 1 April each year.
Practical implications: if you have sold a coastal Karnataka property for ₹4 crore and taxes and TDS have been settled, the net proceeds in your NRO account can be repatriated fully within one financial year, because ₹4 crore is well below the USD 1 million equivalent (roughly ₹8.5 crore at prevailing rates). For sales above the USD 1 million equivalent, either split repatriation across two financial years or seek RBI approval for a higher limit — approval is routinely granted for genuine transactions.
Joint owners (spouses, for example) each have their own USD 1 million limit. A jointly-owned property sold for ₹15 crore can be repatriated as ₹7.5 crore to each owner within a single year without any RBI escalation.
TDS at Source: 20% + Surcharge — The Calculation the Buyer Should Apply
When an NRI sells property in India, the buyer is legally required to deduct TDS at source on the payment. This is one of the most consistently mishandled aspects of NRI property sales, and it is entirely on the buyer to get right — but the seller pays the cost of getting it wrong.
The applicable TDS rates as of 2026 are:
- Long-term capital gains (property held more than 2 years): TDS at 20% + surcharge + cess. Effective rate is approximately 22.88% for gains up to ₹50 lakh, rising with surcharge slabs beyond.
- Short-term capital gains (property held less than 2 years): TDS at the seller's applicable slab rate — practically, 30% + surcharge + cess.
The critical detail is that TDS applies to the entire sale consideration, not just the gain, unless the seller obtains a Lower Deduction Certificate (see Section 197 below). This means on a ₹4 crore sale, the buyer would deduct ₹91.5 lakh as TDS on the full amount at 22.88%, even if the actual capital gain is only ₹1.5 crore. The seller then claims refund of excess TDS through the annual tax return — a process that takes 8-18 months.
Alternative: the seller applies for a Lower Deduction Certificate under Section 197 before the sale, which allows the buyer to deduct TDS only on the actual capital gain rather than the full sale consideration. This is the single highest-impact tax optimisation available to NRI sellers.
Form 15CA and 15CB — What Your CA Needs From You
Repatriation of sale proceeds from India requires two forms filed with the tax department before the bank will process the transfer:
- Form 15CB: A certificate from a Chartered Accountant certifying that the appropriate tax has been paid on the funds being repatriated. This form is filed by the CA electronically after reviewing the sale documentation, tax payment challans, and computation of any capital gains.
- Form 15CA: A declaration by the remitter (you, or your bank on your behalf) referencing the 15CB certificate and confirming the details of the remittance. This is filed electronically before the bank executes the transfer.
To enable your CA to file 15CB efficiently, you will need to provide: sale deed (registered copy), original purchase deed for the property, evidence of the cost of any improvements, TDS deduction certificates from the buyer, tax computation showing capital gains, and evidence of all tax payments made. A well-prepared file allows a CA to issue 15CB in 3-5 working days. Poorly organised documentation can extend this to weeks.
NRO to NRE Transfer vs. Direct Foreign Transfer
You have two options for the actual repatriation:
- NRO to NRE transfer: Move funds from your Indian NRO account to your Indian NRE account. Once in the NRE account, funds are freely repatriable at any time in any currency. This is the more common route because it gives you flexibility on the timing of the actual foreign transfer.
- NRO to foreign account direct transfer: Wire funds directly from your NRO account to your foreign bank account in a chosen currency. This is faster but locks in the exchange rate at the moment of transfer.
Either route requires the 15CA/15CB filing before the bank will execute. The NRO to NRE route is generally preferred by NRIs who want optionality on the currency conversion timing, or who plan to reinvest funds in India via NRE-linked deposits or mutual funds.
RBI Reporting Obligations and Timelines
The property sale itself must be reported to the RBI through your Authorised Dealer bank within 90 days of the sale registration. This is done through the AD bank's standard FEMA reporting channels — you do not directly interact with the RBI in most cases. The bank collects your details, files the FC-TRS or equivalent form, and provides confirmation.
Failure to report within 90 days is a technical FEMA violation and can complicate future repatriation. It is easily fixed via compounding application to the RBI, but the process takes several months. Report on time.
Lower TDS Certificates (Section 197) — When They Are Worth Pursuing
Section 197 of the Income Tax Act allows a taxpayer, including an NRI seller, to apply to the assessing officer for a certificate authorising TDS deduction at a lower rate — or at nil rate — where the standard TDS rate would result in excess deduction relative to the actual tax liability.
For NRI property sellers with substantial acquisition cost and inflation indexation benefits, the Section 197 application can reduce the buyer's TDS obligation from ~22.88% of the full sale consideration to a much smaller percentage reflecting only the actual capital gain. On a ₹4 crore sale with a ₹1.5 crore actual gain, this can free up ₹40-50 lakh of cash flow at the transaction stage rather than tying it up in refund claims for 8-18 months.
The application takes approximately 30-45 days to process, so it must be initiated well before the sale. For any NRI property sale above ₹1 crore, the Section 197 route is almost always worth the effort. For sales below ₹50 lakh, the effort may not be justified against the benefit.
Common Mistakes: The Two That Cost NRIs the Most
Mistake 1: Letting the buyer pay in full without proper TDS deduction. Some buyers, especially in smaller-town transactions, either do not apply TDS at all or apply it at the resident rate of 1% rather than the NRI rate of 22.88%. This creates a large tax liability for the seller that must be discharged later, often with interest and penalties. The seller cannot repatriate until this is settled.
Mistake 2: Repatriating from NRO without proper documentation trail. Some NRIs attempt to repatriate sale proceeds without adequate documentation of the property's original acquisition cost, improvement costs, and tax positions. The bank may process the transfer, but the tax exposure remains open and can surface years later during scrutiny assessments. Full documentation from acquisition through sale is the only defensible position.
How SSV Realty Supports NRI Sellers
For NRI clients who acquired coastal Karnataka properties through SSV Realty, we retain complete acquisition documentation and can assist with the sale-side execution when the time comes. This includes coordination with FEMA-competent CAs, buyer-side TDS compliance guidance, and Section 197 application support. We do not provide tax advisory ourselves — that is the CA's remit — but we ensure the transaction documentation trail supports whatever tax position you choose to take.
For NRIs holding coastal Karnataka properties acquired elsewhere who are now planning a sale, contact our team for an initial conversation. If you are earlier in the NRI investment journey and want to understand both the entry and exit before committing, the SSV NRI Investment Guide covers acquisition-side considerations in detail.