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Introduction As of May 2025, the new financial year in India is well underway, and Non-Resident Indians (NRIs) considering selling their property in India must navigate a complex landscape of evolving tax regulations and procedural formalities. The Union Budget and amendments to the Income Tax Act
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FAQ :
NRIs can either sell their property and have the buyer deduct Tax Deducted at Source (TDS) at the standard rate of 20-23% on the full sale amount, or they can apply for a Lower TDS Certificate to have TDS deducted only on the actual capital gains.
The standard TDS method can result in delayed access to funds, as refunds may take up to 18 months to process, and refund claims are subject to increased scrutiny and potential delays due to unresolved tax matters.
The Lower TDS Certificate is recommended because it allows TDS to be deducted only on actual capital gains, not the full sale price. This means NRIs receive a larger portion of their proceeds upfront, have immediate access to funds, and enjoy simplified compliance.
The first step is to sign a Memorandum of Understanding (MoU) with the prospective buyer, outlining the intent to transact. It's advisable to keep the token amount under ₹1 lakh until the certificate is issued.
Key documents include proof of NRI status (passport, visa, residency confirmation), the property purchase agreement, original sale deed or allotment letter, and proof of payment and cost of acquisition to determine capital gains.
The Lower TDS Certificate is typically issued within 30 to 45 days after submitting the online application. The Income Tax Department may raise queries, which can be addressed by an appointed representative.
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