There are many reasons why someone might want to sell their property in India. Maybe they’ve moved abroad and don’t have a use for it anymore, or maybe they’re facing financial difficulties and need the money.
Whatever your reason may be, it’s important to understand the process of selling a property in India before you get started. In this blog post, we’ll discuss the steps involved in NRI selling property in India, as well as some of the challenges you might face along the way.
So if you’re thinking about selling your Indian property, keep reading!
- Can NRI Sell Property in India?
- Procedure for NRI Selling Property in India
- NRI Selling Property in India Using Power of Attorney
- Documents Required for NRI to Sell Property in India
- Property Transfer Through Mortgage
- Tax Implications for NRI Selling Property in India
- TDS for NRI Selling Property in India
- Repatriation of Sale Proceeds by NRI
- Frequently Asked Questions
Can NRI Sell Property in India?
A Non-Resident Indian (NRI) can sell his/her residential or commercial property to either a Resident Indian, another NRI or a Person of Indian Origin (PIO). Such transactions do not require any special permission from the Reserve Bank of India (RBI).
A Person of Indian Origin (PIO) can sell his/her residential or commercial property to either a Resident Indian or a Non-Resident Indian (NRI). However, a PIO selling his property to another PIO would require prior approval from RBI.
A foreign national of non-Indian origin, including a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, can sell property in India only with the prior approval of RBI.
Procedure for NRI Selling Property in India
The procedure for NRI selling property in India is almost similar to a Resident Indian. An NRI or PIO can transfer any immovable property other than agricultural land, plantation property or farm house in India:
- a) By way of sale to a person resident in India.
- b) By way of gift to a person resident in India or an NRI or a PIO.
If the property is agricultural land, plantation property or farm house acquired by way of inheritance, it can only be sold (or given as a gift) to Indian citizens permanently residing in India.
Foreign Nationals of non-Indian origin who have acquired immovable property in India by way of inheritance with the specific approval of RBI can not transfer such property without prior permission from RBI.
NRI Selling Property in India Using Power of Attorney
An NRI who lives outside of India has an option to give Power of Attorney (POA) authorizing a relative or friend residing in India to sell on his/her behalf.
In order to sell a property, a general power of attorney is not enough. It has to be a special power of attorney, which is registered, and notarized.
Documents Required for NRI to Sell Property in India
The following documents are required for NRI to sell property in India:
- Identity Proof: Passport, OCI card if applicable
- Address Proof
- PAN Card
- Title Deed (in the seller’s name)
- Older Title Deeds (if any)
- Updated Encumbrance Certificate
- Mutation Extracts (also known as Khata, Pokkuvaravu etc.)
- Tax Receipts (building tax & land tax)
- Passport Size Photos
- Loan closure certificate if you had a home loan
In case of resale of apartments, the following documents may also be needed:
- Approved Plan
- Building Permit
- Occupancy Certificate*
- Completion Certificate*
- Commencement Certificate*
- Allotment Letter*
- Possession Letter*
- Share certificate*
- NOC from the society*
- NOC from local bodies*
- RERA registration*
*only applicable in some cases
Please note that the documents required for the sale of property may vary according to the nature of the property or location. Please contact a qualified legal professional if needed.
READ: Documents Checklist for NRI Buying Property in India
Property Transfer Through Mortgage
An NRI, PIO can mortgage residential or commercial property to:
- a) an authorised dealer/ housing finance institution in India without the approval of RBI.
- b) a party abroad – with prior approval of RBI.
A foreign national of non-Indian origin can mortgage only with prior approval from RBI.
A foreign company which has established a Branch Office or other place of business in accordance with FERA/FEMA regulations has general permission to mortgage the property with an authorized dealer in India.
Tax Implications for NRI Selling Property in India
Similar to Resident Indians, NRIs also have to pay tax on the Capital Gains after the sale of the property.
- If the property is sold after a period of 2 years(1) from the date it was owned – there is a Long Term Capital Gain (LTCG)
- In case it is held for 2 years or less, there is a Short Term Capital Gain (STCG).
(1) Reduced from 3 years to 2 years in Budget 2017
In case the property has been inherited, the date of purchase of the original owner will be considered. In such a case the cost of the property shall be the cost to the previous owner.
TDS for NRI Selling Property in India
For NRIs selling property in India, the rate of TDS (tax deducted at source) is 20.6% in case of long-term capital gain and 30.9% in case of short-term capital gains.
Please note that NRIs are allowed to claim exemptions under section 54 and Section 54EC on long-term capital gains from the sale of house property in India.
Repatriation of Sale Proceeds by NRI
Upon sale of immovable property other than agricultural land, farmhouse, or plantation property in India by an NRI or PIO, repatriation of sale proceeds outside India is allowed if the following conditions are met:
- The immovable property was acquired in accordance with the provisions of the foreign exchange law in force at the time of acquisition or the provisions of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations 2018;
- The amount for acquisition of the property was paid in foreign exchange received through banking channels or out of the funds held in foreign currency non-resident account or out of the funds held in the non-resident external account;
- In the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.
For this purpose, repatriation outside India means the buying or drawing of foreign exchange from an authorised dealer in India and remitting it outside India through normal banking channels or crediting it to an account denominated in foreign currency or to an account in Indian currency maintained with an authorised dealer from which it can be converted in foreign currency.
In case the property is acquired out of Rupee resources and/or the loan is repaid by close relatives in India ( as defined in Section 6 of the Companies Act, 1956), the amount can be credited to the NRO account of the NRI/PIO. The capital gains, if any, arising out of the sale of the property can also be credited to the NRO account.
NRI/PIO are also allowed by the Authorised Dealers to repatriate an amount up to USD 1 million per financial year out of the balance in the NRO account for all bonafide purposes to the satisfaction of the authorised dealers, subject to tax compliance.
References: Ministry of External Affairs, Reserve Bank of India
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Frequently Asked Questions
In which accounts can the sale proceeds of such immovable property be credited?
The sale proceeds may be credited to the NRO account.
Can the sale proceeds of the immovable property purchased while being a Resident be remitted abroad by NRI?
Yes, provided the amount to be remitted does not exceed USD one million per financial year, for all bonafide purposes to the satisfaction of Authorised Dealers and subject to tax compliance.
If the immovable property was acquired by way of gift by the NRI/PIO, can he repatriate abroad the funds from sale?
The sale proceeds of immovable property acquired by way of gift should be credited to the NRO account only. From the balance in the NRO account, NRI/PIO may remit up to USD one million, per financial year, subject to the satisfaction of the Authorised Dealer and payment of applicable taxes.
You May Also Like
- NRI Buying Property in India: All Your Questions Answered
- NRI Home Loan: Eligibility, Interest Rates and More
- Foreigners Buying Property in India: Things To Know
- Documents Checklist for NRI Buying Property
7 thoughts on “NRI Selling Property in India: The Ultimate Guide (2023)”
I am a person of Indian origin currently having a N Zealand passport without an Adhaar or PAN Card. I have however a POA to my husband notarized at the NZ High Commission in Auckland NZ relating to a property in Pune India which I own. My husband has a PAN and Adhhar card and is also a New Zealand national. Can he sell my property on my behalf as authorised in the POA.
I am an NRI. I inherited a piece of land about 75 cents from ancestral property after partition after my father’s death in 1997. I want to sell the land. After a long period of trying to sell it as agricultural land, I am finding out that I can sell it as plots. Can I sell it using the RERA process. Are NRI (US citizen) allowed to use RERA process?
Why does the Indian Tax Dept consider that the proceeds from the sale of a house (an asset) are all classed as income for tax purposes. Is the Indian Government picking on NRI’s as soft targets to generate taxation?
Q: I am an NRI in USA and interested in buying a residential property in India with funds either transferred from US or held in NRE/NRO accounts in India. At time of selling will I be permitted to repatriate all sale proceeds less TDS or just the dollar amount equivalent of initial purchase amount. Will the profits from sale are permitted to repatriate or not? Kindly clarify. Thanks in advance.
I am a NRI since last 15 years, I had brought a property when I was residing in India and now want to sell it to buy other property. As from the sale proceeds other property will be purchased, in this case also is TDS Applicable ?
Thanks for your guidance.
I AM SELLING RESIDENTIAL FLAT IN MUMBAI
WHERE FINAL SETTLEMEMT IS DONE , IN LAWYER’S OFFICE OR ALL DOCUMENTS ARE SIGNED IN COURT OR REGISTRAR’ OFFICE?
Hi Chandrakant, For selling your property, documents should be signed in Registrar’s Office.