The Exit Playbook · updated for FY 2026-27 rules
Selling Indian property as an NRI — the playbook nobody writes
Everyone sells you the entry. Here’s the exit: capital gains, the TDS trap, the certificate that fixes it, and how the money actually gets back to Toronto or Dallas. Knowing this before you buy is what makes buying rational.
1 · The tax you’ll actually pay
- Held 2+ years → long-term capital gains at 12.5%, no indexation (regime for property acquired on/after 23 July 2024; older purchases have legacy computation options — CA territory).
- Held under 2 years → short-term: gains taxed at your slab rate.
- Reinvestment shelters exist: another residential property (Sec 54) or capital-gains bonds (Sec 54EC, ₹50L cap) can eliminate LTCG. DTAA credits usually prevent double taxation in the US/Canada.
2 · The TDS trap — and the form that fixes it
The trap: when an NRI sells, the buyer must withhold TDS at
12.5% — up to ~14.95% with surcharge and cess — on the ENTIRE sale price, not your gain. Sell a ₹3 Cr flat
you bought for ₹2.5 Cr and ~₹45L gets withheld against a real tax bill of ~₹6L. Your money, stuck until a
refund cycle.
The fix: apply for a lower/nil deduction certificate (the old Form 13 — renumbered Form 128 under the new IT rules) BEFORE the sale closes. The officer certifies tax on your actual gain, the buyer withholds only that. Budget 4–8 weeks; start when you list, not when you close. Budget 2026 also simplified mechanics: buyers now deposit the TDS against their PAN (no TAN needed) — fewer buyer excuses to fumble it.
3 · Getting the money out
- Sale proceeds land in your NRO account. From there, repatriate up to USD 1 million per financial year (April–March) — above that, split across years or seek RBI approval.
- Paperwork: CA certificate confirming taxes paid (Forms 145/146, the successors to 15CB/15CA). Non-negotiable; banks won’t wire without it.
- Property bought originally via NRE/foreign remittance? Repatriation of the principal is freer (up to two residential properties) — keep your original payment trail forever.
4 · The sequence that works
- Decide sale year with your CA (align with low-income year, DTAA position, USD 1M window).
- List → simultaneously apply for the lower-deduction certificate (Form 128).
- Agreement drafted so TDS follows the certificate; buyer deposits TDS against PAN.
- Registration → proceeds to NRO → CA forms 145/146 → repatriate.
- File the Indian return; claim refund of any excess TDS; claim DTAA credit at home.
Why we publish this on a buying site: because an asset you know how to
exit is worth more than one you don’t. Every hold-period and structure choice at purchase (NRE vs NRO
funding, single vs joint title) changes this playbook — ask us before you wire, not after.
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