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Selling property in India as an NRI in 2026: TDS, capital gains tax and getting the money out

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In short

  • Property held for more than 24 months is long-term, and an NRI pays 12.5% tax on the gain without indexation.
  • The buyer must deduct TDS on the full sale value, not just the gain, with no Rs 50 lakh threshold for NRI sellers.
  • With surcharge and 4% cess, TDS on a long-term sale above Rs 1 crore works out to 14.95% of the price.
  • From 1 October 2026, resident individual and HUF buyers can deposit this TDS using their PAN through Form 141 instead of getting a TAN.

When an NRI sells property in India, the buyer must deduct tax at source on the entire sale price before paying you. If you held the property for more than 24 months, your actual tax is 12.5% of the gain. So the TDS is usually far higher than the tax you owe. You recover the excess by filing an Indian return, or you avoid it upfront with a lower TDS certificate.

This guide covers sales made in tax year 2026-27, the first year under the Income-tax Act, 2025. Sales completed on or before 31 March 2026 fall under the 1961 Act.

Long-term or short-term: the 24-month line

The holding period decides the tax rate. For land and buildings, more than 24 months of ownership makes the gain long-term. Anything shorter is a short-term gain.

For inherited or gifted property, the previous owner’s holding period counts towards yours. A flat your father bought in 2005 and left to you in 2025 is long-term if you sell it today.

How much tax an NRI actually owes

Long-term capital gains

Long-term gains are taxed at 12.5% under Section 197 of the 2025 Act (Section 112 of the 1961 Act). You subtract the purchase cost, the cost of improvements and selling expenses such as brokerage. There is no inflation indexation for NRIs.

There is an older option of 20% with indexation for land or buildings bought before 23 July 2024. It is written only for resident individuals and HUFs. NRIs cannot use it.

Short-term capital gains

Short-term gains are added to your other Indian income and taxed at slab rates. For TDS purposes, buyers generally deduct at 30% plus surcharge and cess, which assumes the highest slab.

Surcharge and cess

Surcharge is a percentage of the tax, not of the gain. It is nil up to Rs 50 lakh, 10% above Rs 50 lakh, 15% above Rs 1 crore, 25% above Rs 2 crore and 37% above Rs 5 crore. On long-term capital gains, surcharge is capped at 15%. A 4% health and education cess then applies on tax plus surcharge.

TDS on the full sale value

Payments to non-residents fall under Section 393(2) of the 2025 Act, Table serial no. 17 (Section 195 of the 1961 Act). The buyer deducts tax on the whole consideration paid to you. The Rs 50 lakh threshold and 1% rate apply only when the seller is resident.

The surcharge slab for TDS is set by the amount being paid. That gives these effective rates:

Sale value paid to you Long-term (12.5% base) Short-term (30% base)
Up to Rs 50 lakh 13.00% 31.20%
Rs 50 lakh to Rs 1 crore 14.30% 34.32%
Rs 1 crore to Rs 2 crore 14.95% 35.88%
Rs 2 crore to Rs 5 crore 14.95% 39.00%
Above Rs 5 crore 14.95% 42.74%

The 14.95% figure is 12.5% × 1.15 × 1.04. The 39% figure is 30% × 1.25 × 1.04. Above Rs 5 crore, the TDS schedule for non-residents in the Finance Act, 2026 uses a 37% surcharge (30% × 1.37 × 1.04), unless the seller is taxed under the new regime in Section 202, where the surcharge stops at 25%. Many buyers apply 37% unless your new-regime position is clear to them. Your final tax under the new regime caps surcharge at 25%, and any excess comes back as a refund.

The 1 October 2026 change for buyers

Until 30 September 2026, every buyer purchasing from an NRI needed a Tax Deduction Account Number (TAN). Joint buyers each needed one. That deterred many resident buyers.

Budget 2026 amended the 2025 Act (reports cite Section 397(1)(c)) so that resident individual and HUF buyers no longer need a TAN for this purpose. CBDT Notification 121/2026, dated 22 September 2026, put this into the rules from 1 October 2026.

Eligible buyers now deposit and report the TDS against their PAN in Form 141, using a new Schedule E. The buyer has 30 days after the end of the month of deduction to file it. Each joint buyer files a separate form.

Schedule E asks for your overseas address, contact details, tax residency certificate and foreign tax ID where available. It also captures any lower deduction certificate. Have these ready before closing.

Three points to note:

  • The rate does not change. Only the paperwork is simpler.
  • Companies, firms and other buyers still need a TAN and file the quarterly statement in Form 144 (old Form 27Q).
  • You still get a TDS certificate. Under the PAN route it is Form 132; TAN-route buyers issue Form 131 (old Form 16A).

Worked example: flat bought in 2015, sold in October 2026

Priya lives in Toronto. She bought a flat in Pune in 2015 for Rs 60,00,000 and sells it in October 2026 for Rs 1,40,00,000. She pays Rs 1,40,000 in brokerage and has no other Indian income.

Her actual tax

  • Capital gain: Rs 1,40,00,000 − Rs 60,00,000 − Rs 1,40,000 = Rs 78,60,000
  • Tax at 12.5%: Rs 9,82,500
  • Surcharge at 10% (income above Rs 50 lakh): Rs 98,250
  • Cess at 4% on Rs 10,80,750: Rs 43,230
  • Total tax: Rs 11,23,980

TDS the buyer deducts

  • Rs 1,40,00,000 × 14.95% = Rs 20,93,000

Excess held by the tax department

  • Rs 20,93,000 − Rs 11,23,980 = Rs 9,69,020

Priya gets this back as a refund after filing her return for tax year 2026-27. A lower TDS certificate, applied for before the sale, would have kept most of it in her hands from day one. See our Form 128 guide.

If she reinvests the gain under the exemptions for a new house or specified bonds, her tax could fall further. Those options are covered in our capital gains exemptions guide.

Claiming the refund through your return

Some NRIs assume that because the buyer has already deducted tax, there is nothing left to file. In fact, filing a return is the only way to get excess TDS back. It is also where you report the sale and claim any exemption.

For a sale in October 2026, the return is for tax year 2026-27. For individuals without business income, the due date is 31 July 2027. Budget 2026 proposed letting returns be revised up to 12 months after the tax year ends, with a fee after nine months. Check the current deadline on the income tax portal before relying on it.

Check that the buyer’s TDS appears in your annual tax statement, Form 168 (old Form 26AS), before you file. Credit missing there will hold up your refund.

Getting the money abroad

Sale proceeds usually land in your NRO account. Under RBI rules, NRIs and PIOs can remit up to USD 1 million per financial year (April to March), including property sale proceeds. See our repatriation guide.

Did you pay for a residential property with foreign exchange or NRE or FCNR funds? Then RBI allows repatriation of sale proceeds for up to two such properties.

Your bank will ask for Form 145 (old Form 15CA) and usually a chartered accountant’s certificate in Form 146 (old Form 15CB). Details are in our Form 145 and 146 guide.

Documents checklist

From you as seller

  • PAN (essential; without it TDS can be deducted at a higher rate and is harder to credit)
  • Passport and visa or OCI card
  • Purchase deed and payment proof for the original cost
  • Bills for improvements, and brokerage invoices for the sale
  • NRO account details for receiving payment
  • Tax residency certificate and foreign tax ID, for the buyer’s Form 141
  • Lower TDS certificate, if you obtained one

From the buyer

  • PAN (and TAN, if not using the PAN route)
  • Challan and Form 141 or Form 144 acknowledgement
  • TDS certificate after filing

Common mistakes

  • Assuming the Rs 50 lakh threshold applies. It does not. TDS is due on every rupee paid to an NRI seller.
  • Letting the buyer deduct only 1%. That is the resident-seller rate. A buyer who under-deducts faces interest and penalties, and the sale can be questioned later.
  • Claiming 20% with indexation. That option is for residents only.
  • Not filing a return. Excess TDS is refunded only through a return for the tax year of sale.
  • Leaving the certificate application too late. A lower TDS certificate cannot be processed once the payment has been made.
  • Mixing NRE and NRO. Sale proceeds generally go to NRO. Plan repatriation through the USD 1 million route with Forms 145 and 146.

If your sale involves inherited property, several co-owners or an exemption claim, have a chartered accountant check the computation before closing.

What to do next

Sources

This guide explains the rules as they stood on 25 October 2026. It is general information, not tax, legal or financial advice. Rules change, and individual cases have exceptions, so confirm your position with a chartered accountant before acting. Spotted an error? Tell us and we will correct it.