If you’re a Non-Resident Indian (NRI) planning to sell property in India, you must be aware of the repatriation rules to transfer sale proceeds abroad legally. The Reserve Bank of India (RBI) and FEMA (Foreign Exchange Management Act) govern the process to ensure compliance.
1. Can NRIs Repatriate Property Sale Proceeds?
Yes, NRIs can repatriate sale proceeds, but with certain conditions based on:
- Type of funds used for property purchase (NRE/NRO account or remittance from abroad).
- Number of properties eligible for repatriation.
- Tax compliance requirements.
2. Repatriation Rules Based on Source of Investment
A. If Property Was Purchased Using NRE or Foreign Funds
✅ Full repatriation is allowed for up to two residential properties.
✅ The amount cannot exceed the original foreign investment used for purchase.
✅ Sale proceeds must be credited to the NRE account and transferred abroad.
B. If Property Was Purchased Using NRO Funds or Indian Earnings
✅ Repatriation is allowed up to $1 million per financial year under the Liberalized Remittance Scheme (LRS).
✅ Tax clearance (Form 15CA/CB) from a chartered accountant is required.
✅ Funds must be deposited into an NRO account before repatriation.
3. Taxation on Property Sale for NRIs
When selling real estate, NRIs are subject to capital gains tax based on the holding period:
| Holding Period | Tax Type | Tax Rate |
|---|---|---|
| Short-Term Capital Gains (STCG) (Held ≤ 2 years) | Taxed as per slab rates | Up to 30% |
| Long-Term Capital Gains (LTCG) (Held > 2 years) | 20% with indexation | 20% + surcharge & cess |
🔹 TDS Deduction: Buyers must deduct 20% TDS on LTCG or as per tax slabs for STCG.
🔹 Tax Exemptions: NRIs can save tax by reinvesting in another property (Section 54) or capital gains bonds (Section 54EC).
4. Repatriation Process: Step-by-Step Guide
Step 1: Deposit Sale Proceeds into NRO Account
- Sale proceeds must be credited to an NRO account before repatriation.
- If purchased with NRE funds, you can transfer directly to your NRE account.
Step 2: Pay Capital Gains Tax & Obtain Tax Clearance
- Compute capital gains tax and pay applicable dues.
- Obtain Form 15CA (self-declaration) and Form 15CB (CA certification) from a chartered accountant.
Step 3: Submit Request for Repatriation to the Bank
- Provide sale documents, tax payment proof, 15CA/CB forms, and bank request form.
- Banks process remittance within 5-10 working days.
5. Key Considerations for NRIs
✔ Repatriation Limit: Up to $1 million per financial year for properties bought with Indian funds.
✔ Tax Compliance: Ensure TDS is deducted correctly by the buyer.
✔ RBI Approval: Not required if within prescribed limits.
✔ Jointly Owned Property: Each co-owner can repatriate $1 million separately.
Final Thoughts
NRIs selling property in India must follow RBI’s repatriation rules, comply with tax norms, and plan tax-saving strategies before transferring funds abroad. Consulting a tax expert can help simplify the process.
Would you like guidance on capital gains tax savings or NRO to NRE fund transfers? 🚀
