Three parts of an Indian property sale cost non-resident Indians money. The first is the title file you assemble before listing. The second is the tax the buyer must withhold at registration. The third is the paperwork required to move the proceeds to a U.S. account. Price negotiation is the simplest part of the transaction.
This post covers a property you bought yourself and hold in your own name, sold directly to a single buyer. Inherited property changes the required documents, the cost basis and the repatriation limits. It is covered in selling an inherited property in India.
1. The title file
Assemble these documents before you list the property. The buyer's lawyer will ask for every item, and correcting gaps in the record from abroad takes weeks.
- The chain of title, which is your registered sale deed plus prior deeds establishing an unbroken 30-year chain.
- An encumbrance certificate from the sub-registrar, covering at least 13 years, to show registered charges.
- The mutation record, which is the municipal record reflecting your name (Khata in Karnataka, patta in Tamil Nadu, 7/12 extract in Maharashtra).
- Property tax receipts that are current and show no outstanding arrears.
- Approved plans and certificates. These are the approved building plan, the occupancy certificate and, for apartments, a completion certificate.
- A society NOC, which is a no-objection certificate from the association confirming zero outstanding maintenance dues.
- Loan closure documents, if a mortgage existed. These are the original deed released by the bank and the filed charge satisfaction.
- PAN, passport, OCI card and proof of NRI status. The buyer's counsel will verify your residency. Residency determines the withholding rate.
If you will not be in India for the registration, execute a specific power of attorney that names the transaction, the property and the attorney's exact powers. A general power of attorney is weaker, and several state registrars now question it. Sign before an Indian consular officer in the United States, or sign before a US notary and have the document apostilled. Adjudicate and stamp it in the relevant Indian state within three months of arrival.
2. What the buyer must withhold
Resident sellers have 1% withheld under Section 393(1) of the Income Tax Act, 2025. Non-resident sellers face an effective withholding rate of 14.95% on the entire sale consideration under Section 393(2).
This is tax deducted at source, or TDS. The buyer deducts it from your price and pays it to the tax department. The base rate of 12.5% plus a 15% surcharge (for transactions over ₹1 crore) and 4% cess applies to the gross price rather than your capital gain. There is no minimum threshold, unlike the ₹50 lakh resident rule.
Withholding applies to every payment, including token money and installments, at the time of credit or payment. Each milestone requires a separate deposit.
You must give the buyer your PAN, your Indian tax ID, before the first payment. Otherwise the deduction rises to a penal 20% under Section 397(2)(b)(i).
Property held for 24 months or less is classified as short-term. That triggers a withholding rate of 30% plus applicable surcharge and cess, and the gains are taxed at standard slab rates. Any excess tax withheld is fully refundable, but you must file an Indian tax return for the tax year of the sale to claim it.
The Section 195 gap: what the buyer withholds against what you owe
| Item | Amount |
|---|---|
| Sale price (2026) | ₹2,00,00,000 |
| Purchase price (2012) | ₹60,00,000 |
| Long-term capital gain | ₹1,40,00,000 |
| Indian tax due: 12.5% + 15% surcharge + 4% cess | ₹20,93,000 |
| TDS withheld without a certificate: 14.95% of gross | ₹29,90,000 |
| Excess withheld, refundable after you file | ₹8,97,000 |
Illustrative. Long-term sale by a non-resident, held since 2012. Surcharge on capital gains is capped at 15%. The excess is refunded only after an Indian return is filed for the year of sale.
The ₹8,97,000 excess withholding is refundable, but claiming it requires filing an Indian tax return for the tax year of sale. Under the 2025 Act, "tax year" replaces "assessment year." A sale in the year ending March 2027 is reported for tax year 2026-27. That ties up roughly $9,300 for 18 months without interest.
You bear the consequences if the buyer makes an error or files late. The tax credit and refund remain locked until the deduction appears in your Form 168 (formerly Form 26AS). That happens after the buyer deposits the funds and files their return.
Check local stamp duty values before you price your property. If the agreed price falls below the circle rate (the government's minimum value for the area), capital gains are calculated using the higher stamp duty value, subject to a narrow tolerance band. You then pay tax on an inflated figure while receiving less cash.
What the buyer has to file
Regulatory requirements for buyers changed on October 1, 2026. Until September 30, 2026, individual buyers had to acquire a Tax Deduction Account Number (TAN) and file Form 144. From October 1, 2026, Clause 75 of the Finance Act 2026 amends Section 397(1)(c). The amendment allows resident individuals and Hindu Undivided Families (HUFs) purchasing from non-residents to use a PAN-based challan instead. Corporate and firm buyers still require a TAN.
3. The lower deduction certificate
Under Section 395 of the 2025 Act (formerly Section 197), non-resident sellers can ask assessing officers for a lower withholding rate. The application goes on Form 128 (formerly Form 13) on the TRACES portal, under Rule 213 of the Income-tax Rules, 2026. This directs the buyer to withhold tax on calculated capital gains rather than gross proceeds. The application requires the sale agreement, the original purchase deed, a cost computation and a breakdown of the expected tax liability.
On approval, the officer issues a certificate. It specifies the buyer's TAN and the exact reduced rate or amount that replaces the standard 14.95% deduction on the gross price. The Finance Act 2026 allows a broader range of officers to issue certificates electronically for faster turnaround. Sellers should still not delay filing.
Securing the certificate takes six to eight weeks, depending on local jurisdiction. Applications started after signing an agreement will miss the window. Start well before accepting an offer.
If the certificate is not in hand at registration, the buyer must legally withhold the full statutory amount. Informal side agreements cannot alter this obligation.
An earlier post works through the same certificate on a ₹7 crore Mumbai sale: the 12.5% trap. We can also help with the lower TDS certificate application.
4. Moving the money
Sale proceeds land in your NRO account, the rupee account for your Indian income. Moving them to the U.S. depends on how you funded the purchase:
- If you bought with foreign-currency funds, through an inward remittance or an NRE/FCNR account, FEMA (India's foreign exchange law) allows repatriation for up to two residential properties, capped at the original foreign currency brought in.
- If you bought with rupee funds, either local or NRO, repatriation follows the general limit of $1 million per financial year across all sources.
Both paths require Rule 220 filings. A chartered accountant first issues a certificate (Form 146 / old Form 15CB) confirming taxes are paid. You then submit Form 145 Part C (old Form 15CA) on the income tax portal. Your bank will reject old forms and refuse the wire without these current documents.
Currency movement after the sale date creates an unhedged risk. U.S. capital gains are fixed at the exchange rate on the sale date, but rupee values fluctuate. Converting ₹1 crore at ₹84 per dollar yields $119,048. At ₹96 it yields $104,167, a 12.5% dollar loss if you delay.
Tax bills are fixed at historical rates, and Section 988 generally disallows personal foreign currency losses. You bear the full fall in the value of cash you have not yet repatriated. We can help with the repatriation paperwork.
The sale, in order
- Before listing, assemble the title file, and execute a specific power of attorney if you will not be in India for the registration.
- Before accepting an offer, apply on Form 128 for the lower deduction certificate. It takes six to eight weeks.
- Before the first payment, give the buyer your PAN, and check the agreed price against the stamp duty value.
- At each payment, the buyer withholds, deposits the tax and files. Check that the deduction appears in your Form 168.
- After the sale, get Form 146 from a chartered accountant, file Form 145 Part C, and send the wire.
- After the tax year ends, file an Indian return to claim back any excess withheld.
From Edition 13 of the NRI Playbook newsletter. For informational purposes only; not financial, tax, or legal advice. For decisions about your specific situation, consult a qualified cross-border tax professional.