Phase 1 — Before you find a buyer (6–12 weeks ahead)
The mistakes that cost NRIs most are made before the property even goes to market. Documents that seem routine — a title deed, an encumbrance certificate — can take weeks to obtain, and applying for Form 128 (formerly Form 13) without a signed agreement in hand wastes the Assessing Officer's time and your own. Starting early is not cautious; it is the difference between a clean transaction and a distressed one.
- Pull the original title documents: registered sale deed or gift deed under which you acquired the property, any chain deeds back to the original owner, and the khata/patta or share certificate if it is an apartment.
- Order an Encumbrance Certificate (EC) for at least 12–15 years from the sub-registrar's office; this confirms no mortgages, court orders, or other charges are registered against the property.
- Confirm your PAN is active and linked to your correct mobile number and email — you will need it for every filing. If you do not have a PAN, apply now; processing takes three to four weeks.
- Check that your NRI status is documentable for the relevant financial year: passport entries, visa stamps, employment or residency proof abroad.
- Verify property tax receipts are current. Outstanding dues must be cleared before registration, and a last-paid receipt is typically required.
- If the property is jointly owned, get all co-owners involved early — separate Forms 128, separate ITRs, and coordinated PoAs if any co-owner is also abroad.
Every co-owner counts as a separate seller. Each needs their own PAN, their own capital-gains computation, and their own Form 128 if they want lower TDS. Starting conversations with co-owners 10–12 weeks out avoids a last-minute scramble before registration.
Phase 2 — Getting your tax paperwork in order (6–8 weeks before registration)
The biggest cash-flow risk in an NRI property sale is the TDS deduction. By default, the buyer must deduct tax under Section 393(2) (formerly Section 195) on the entire sale price at the applicable NRI rate — which on short-term gains can run close to 30%. On a Rs 2 crore sale where the actual capital gain is Rs 40 lakh, that default wipes out a large chunk of your proceeds upfront, leaving you to recover the excess by filing your ITR — a process that can stretch close to a year. Form 128 (formerly Form 13) is the solution: it is the lower-TDS certificate that instructs the buyer to deduct only on your real gain.
Start the Form 128 application immediately after signing the agreement to sell. The Assessing Officer can take 4–6 weeks; add buffer for queries. Once the sale deed is registered the window is closed — the buyer must deduct at the full default rate.
| Scenario | TDS deducted on | Cash you lose upfront |
|---|---|---|
| No Form 128 (default) | Full sale price — Rs 2,00,00,000 | Potentially 12.5–30% of Rs 2 crore locked away |
| With Form 128 | Actual capital gain — say Rs 40,00,000 | Only the tax on Rs 40 lakh withheld — remainder in your hands at closing |
The application requires: your PAN and passport, proof of NRI status, the original purchase deed, the signed agreement to sell, a capital-gains computation (showing indexed cost, cost of improvements, exemptions you intend to claim), and the buyer's PAN and TAN. Missing documents are the most common cause of delay — the Assessing Officer will not issue the certificate on an incomplete file.
Phase 3 — Power of Attorney if you cannot be present
Most NRIs are not in India for the full duration of a sale — and that is fine, as long as the paperwork is right. A notarised and apostilled Power of Attorney (PoA) allows a trusted person in India to sign the sale deed, collect the consideration, and handle post-sale compliance on your behalf. But a poorly drafted PoA can be rejected at registration, challenged later, or leave your attorney with authority they cannot actually use.
- Draft the PoA specifically for the property sale, naming the property by its survey/flat number, registered address, and registration details. A generic PoA is often refused by sub-registrars.
- Have it notarised in your country of residence, then apostilled (Hague Convention countries) or consularised (non-Hague countries, including some Gulf states).
- Register the PoA at the relevant sub-registrar's office in India before the sale deed is executed — many states require this, and it provides a second layer of legal protection.
- Choose your attorney carefully: they will sign the deed and receive the consideration on your behalf. Verify their KYC with the bank if funds are to be received directly.
- If the PoA is being used to receive money, ensure the bank account details are in your name (NRO account) — proceeds of an NRI property sale must flow into an NRO account, not the attorney's personal account.
Countries like the UAE, Saudi Arabia, Qatar, and Kuwait are not part of the Hague Apostille Convention. NRIs resident in Gulf states must have their PoA attested by the Indian Embassy or Consulate rather than apostilled. Verify the correct route with your sub-registrar before you travel.
Phase 4 — Capital-gains planning before you sign
Once the sale deed is registered and the consideration paid, your capital-gains liability is set. The time to reduce it is before that point. Two exemptions are commonly available to NRIs — Sections 54 and 54F — both requiring that you either have already reinvested in a residential property or intend to within a specified window. Miss the reinvestment deadline and the exemption falls away.
- Applicable when you sell a residential property and reinvest gains in another residential property
- Reinvest within 1 year before or 2 years after the sale (or 3 years if constructing)
- From 2023-24 onwards, the exemption is capped at Rs 10 crore
- If capital gain exceeds reinvestment, the excess remains taxable
- Applicable when you sell a non-residential long-term asset (plot, commercial property) and reinvest net sale consideration in a residential property
- Same time window: 1 year before or 2 years after (3 years if constructing)
- You must not own more than one residential house on the date of sale (excluding the new one)
- Proportional exemption if only part of the consideration is reinvested
If you cannot deploy the gains immediately, parking them in a Capital Gains Account Scheme (CGAS) at a designated bank before the ITR due date preserves the exemption clock while you identify a property to buy. Withdrawals from the CGAS must then be used for the specified purpose within the allowed window — any unused amount becomes taxable.
Phase 5 — The sale itself: buyer TDS compliance
Once your Form 128 certificate is in hand, execution is straightforward — but it is worth being clear on the buyer's obligations so you can verify they are met.
- The buyer must deduct TDS at the rate specified on your Form 128 certificate (or at the full NRI rate if no certificate is presented).
- TDS must be deposited with the government by the buyer within the prescribed time — typically by the 7th of the following month.
- The buyer must file Form 27Q (the quarterly TDS return for non-residents) and issue you a TDS certificate (Form 16A), which you will need when filing your ITR.
- Ensure the buyer deducts against your PAN — if they use an incorrect PAN, the credit will not appear in your Form 26AS and you will not be able to claim the deduction while filing.
- Confirm the buyer has a TAN (Tax Deduction and Collection Account Number) — they cannot deposit TDS without one. If the buyer does not have a TAN, they need to apply before the deed is registered.
Phase 6 — Repatriating the proceeds abroad
Sale proceeds from an NRI property sale must first land in your NRO account in India. From there, you can repatriate up to USD 1 million per financial year — but only after completing the required paperwork and satisfying the bank's compliance team. Many NRIs discover this step only when the money has already arrived in the NRO account and the bank asks for documents they have not prepared.
- Form 15CA (online declaration by the remitter) and Form 15CB (Chartered Accountant's certificate confirming taxes have been paid) are mandatory before the bank will process the outward remittance.
- The CA must verify that capital-gains tax has been paid or TDS has been deducted correctly — hence the connection between your ITR filing and the repatriation timeline.
- If the property was purchased using NRE or FCNR funds, repatriation may be permitted up to the original investment amount without the USD 1 million cap applying, but you will need documentary proof of the original source of funds.
- Repatriation of agricultural land, farmhouse, or plantation proceeds is not permitted under FEMA — even if the property was inherited.
- The USD 1 million limit is per financial year and per individual. If the sale proceeds exceed that, plan the repatriation across financial years, or consider repatriating in tranches.
NRIs and OCIs cannot purchase agricultural land, farmhouses, or plantations in India. If you have inherited such property and sold it, repatriation of those proceeds is prohibited under FEMA regardless of tax payment. Speak to a specialist before attempting to transfer such funds abroad.
Phase 7 — ITR filing after the sale
Even if TDS has been deducted correctly at source via Form 128, you still need to file an ITR for the year of the sale. This is not optional — capital gains must be declared in the return, and any TDS credit (or refund) is processed through it. For NRIs, the relevant return is ITR-2 (or ITR-3 if there is also business income). The due date is typically 31 July for individuals, though it can be extended; confirm the current year's date each time.
- Report the capital gain in Schedule CG, using the figures from your sale deed, Form 16A from the buyer, and your gain computation.
- Claim any exemption under Section 54 or 54F in the same return — and if you have deposited funds in a CGAS, report the amount and the scheme account details.
- If your total Indian income (including the gain) exceeds the basic exemption limit — Rs 3 lakh under the new regime for FY 2025-26 — filing is mandatory. Even below that, filing is advisable to trigger the TDS refund if excess was deducted.
- DTAA relief: if the same gain is taxable in your country of residence, check the Double Taxation Avoidance Agreement between India and that country. A Tax Residency Certificate (TRC) from your home country is the document you need to claim treaty benefits in India.
- Keep all documents — sale deed, purchase deed, TDS certificates, CGAS deposits, reinvestment evidence — for at least six years from the end of the assessment year.
Master checklist — all phases at a glance
| Phase | Key action | Timing |
|---|---|---|
| Pre-market | Gather title deed, EC, property tax receipts, PAN, NRI proof | 10–12 weeks before sale |
| Tax paperwork | Sign agreement to sell; file Form 128 on TRACES under Section 395 | Immediately after agreement; 6–8 weeks before registration |
| PoA | Notarise, apostille/attest, and register PoA if you cannot be present | At least 4 weeks before registration |
| Capital gains planning | Evaluate Section 54/54F; open CGAS if needed before ITR due date | Before or at point of sale |
| Sale day | Verify buyer deducts TDS at Form 128 rate; confirm buyer TAN and PAN used | Day of registration |
| Post-sale: TDS credit | Obtain Form 16A from buyer; verify credit in Form 26AS | Within 15 days of TDS deposit |
| Repatriation | Prepare Form 15CA/15CB; submit to bank; confirm USD 1 million limit | After tax payment confirmed |
| ITR filing | File ITR-2; declare capital gain; claim Section 54/54F exemption | By 31 July (confirm due date each year) |
Frequently asked questions
Do I need Form 128 (formerly Form 13) to sell property as an NRI?
You do not legally need it — the buyer can deduct TDS at the full default NRI rate without it. But without Form 128, TDS is deducted on your entire sale price, not just your gain. On a large sale that can mean lakhs locked away for close to a year while your ITR refund is processed. Form 128 is the practical solution to protect your cash flow at the time of sale.
What TDS rate applies when an NRI sells property?
Without a Form 128 certificate, the buyer must deduct TDS on the full sale price. For long-term capital gains (property held over 2 years), the rate is 12.5% on gains (post-Budget 2024, without indexation); for short-term gains it can run close to 30% depending on your slab. With Form 128, the deduction is recalculated on your actual taxable gain at the applicable rate.
Can I sell Indian property without visiting India?
Yes — a notarised and apostilled (or consularised, for non-Hague countries) Power of Attorney allows a representative to sign the sale deed and handle registration on your behalf. The PoA must name the property specifically and, in many states, must be registered at the sub-registrar's office before use.
How much of the sale proceeds can I repatriate abroad?
NRIs can repatriate up to USD 1 million per financial year from an NRO account, provided taxes have been paid and the Form 15CA/15CB certification is complete. If the property was originally purchased using NRE or FCNR funds, additional repatriation may be possible with source-of-funds documentation.
Do I still need to file an ITR if TDS was deducted correctly?
Yes. Capital gains must be declared in your ITR regardless of TDS. Filing is also the mechanism through which any excess TDS is refunded. If total Indian income exceeds the basic exemption limit, filing is mandatory; below that it is still strongly advisable.
What is the Section 54 exemption and does it apply to NRIs?
Section 54 allows you to exempt long-term capital gains on the sale of a residential property if you reinvest the gains in another residential property within one year before or two years after the sale (or three years if constructing). NRIs are eligible for this exemption, but the reinvestment cap is Rs 10 crore from AY 2024-25. If your gains exceed that, the excess is taxable.
What is the Capital Gains Account Scheme and when should I use it?
The CGAS lets you park capital gains in a designated bank account before the ITR due date, preserving your exemption entitlement under Section 54 or 54F while you identify a property to buy. Funds must be withdrawn from the CGAS for the specified purpose within the allowed reinvestment window — otherwise the unutilised amount is treated as capital gains in the year that window closes.
This article is for general information only and reflects rules current as of 2026. It is not legal, tax, or financial advice — rules, rates and procedures can change, so please confirm the current position with a qualified professional before acting.