📖 8 min read
Selling a Parent's Property in India: The NRI Tax Guide
CGT. TDS. FEMA. Form 15CA. Form 15CB. Lower Deduction Certificate. The official rules for NRIs selling property in India read like they were designed to confuse. Here's what actually happens, in order, in plain English.
This guide is a plain-English explanation of the general process. You need a Chartered Accountant (CA) for the actual sale — the numbers, the forms, and the timing are CA work. This guide helps you understand what your CA is doing and ask the right questions. Use MyDailyCost NRI Hub for the financial calculations.
Quick tax estimator
📊 Rough capital gains estimate
⚠️ Rough estimate only — does not include indexation, improvement costs, DTAA relief, or Section 54/54EC exemptions. Get your CA to do the actual calculation.
The process, step by step
Appoint a CA and check documents
Before anything else. Your CA will need: original sale deed / purchase document, Aadhaar and PAN of the seller, property registration details, and evidence of any improvement costs.
- If the property is inherited: the will or succession certificate, and the original purchase deed of the previous owner
- If there's a Power of Attorney: it must be properly executed and registered
Apply for Lower TDS Certificate (Form 13) — optional but smart
By default, the buyer deducts TDS at 20–30% of the full sale value, not just the gain. On a ₹1 crore sale, that's ₹20–30 lakh held back. You get it back in your tax refund — but that takes a year.
- File Form 13 with the Income Tax department before the sale
- They issue a certificate specifying a lower TDS rate (based on the actual gain)
- Takes 4–8 weeks — plan ahead
Sale happens — buyer deducts TDS
At registration, the buyer deducts TDS and deposits it to the government under your PAN. They give you a TDS certificate (Form 16B).
- Buyer files Form 26QB (TDS return) within 30 days
- Check the credit at incometax.gov.in → 26AS statement → confirm TDS is credited under your PAN
CA prepares Form 15CA and 15CB
Before you can send the money abroad, your bank requires these documents proving tax has been paid.
- Form 15CB: your CA certifies the tax has been paid on the remittance (CA work)
- Form 15CA: you file online at the Income Tax portal using the CA's 15CB data
- Both are submitted to the bank before the transfer
File ITR in India
NRIs must file an Indian Income Tax Return for the year of sale if capital gains exceed the basic exemption limit.
- Claim any DTAA relief (if you've paid tax in Australia/UK/US etc.)
- Claim refund if TDS was higher than actual tax
- Deadline: 31 July of the following financial year (or 31 October if audit required)
Repatriate the money (via NRO account)
Sale proceeds go to the NRO account. After tax is paid, up to USD 1 million per financial year can be sent abroad.
- Submit 15CA/15CB to the bank
- Bank processes the foreign outward remittance
- Declare it in your overseas tax return (tax treaties usually prevent double taxation)
Can I reduce the tax?
Reinvest the capital gain (not the full sale proceeds) in one residential property in India within 2 years (purchase) or 3 years (construction). The gain is tax-exempt. Only for long-term gains. One property maximum. CA required.
Invest up to ₹50 lakh of the gain in NHAI or REC bonds within 6 months of sale. Tax-exempt on that amount. 5-year lock-in. Good if you don't want another property.
For long-term gains, the purchase price is inflation-adjusted (indexed) before calculating the gain. Significantly reduces the taxable gain on older properties. Your CA will apply this automatically.
India has tax treaties with Australia, the UK, the US, Canada and many others. If you pay tax on the gain in your country of residence, you can usually claim credit against the Indian tax. Requires your CA and potentially a tax advisor in your country.
- LTCG rate 20% with indexation — current for residential property
- TDS rate 20% (LTCG) / 30% (STCG) on sale value — current
- Repatriation limit USD 1 million per FY — current FEMA regulation
- Form 13 Lower Deduction Certificate — available at incometax.gov.in
- Source: incometax.gov.in · rbi.org.in
Tax rates and rules change annually with the Union Budget — verify with a CA before any sale.
The most expensive mistake: not applying for a Lower TDS Certificate before the sale. On a ₹1 crore sale with a real gain of ₹20 lakh, the buyer will deduct ₹20 lakh in TDS (20% of sale value) but your actual tax is only ₹4 lakh (20% of ₹20L gain). You get the ₹16 lakh difference back — but it takes a year, a CA, and a filed return. Plan ahead. Use the MyDailyCost NRI Hub for remittance and CGT calculations.
Not legal or financial advice. Property tax rules change with every Budget. Appoint a CA before any property sale. For financial calculations: MyDailyCost NRI Hub.