Selling property in India as a Non-Resident Indian involves an extra layer that resident sellers do not deal with: FEMA (Foreign Exchange Management Act) compliance, particularly around repatriating the sale proceeds.
Can NRIs Sell Property in India?
Yes. NRIs can generally sell residential and commercial property in India, though agricultural land, plantation property, and farmhouses have specific restrictions on who they can be sold to.
Do You Need to Be Physically Present?
No – a Power of Attorney executed in your country of residence (typically attested at the Indian embassy or consulate, or notarised and apostilled) allows a trusted representative to complete the sale on your behalf in India.
Tax Considerations
Capital gains tax applies on the sale, with rates depending on how long the property was held. TDS (tax deducted at source) is typically deducted by the buyer at the time of sale, and NRIs should ensure the correct rate is applied, as it can differ from the rate applicable to resident sellers.
Repatriating the Proceeds
Repatriation of sale proceeds is generally permitted up to certain limits under FEMA, subject to conditions on how the property was originally acquired (purchased with foreign exchange, inherited, or acquired as a resident before becoming an NRI). Banks typically require specific certifications, including from a chartered accountant, before remitting funds abroad.
Common Mistakes NRI Sellers Make
- Assuming all sale proceeds can be freely repatriated without conditions
- Executing a Power of Attorney that does not clearly cover the specific transaction intended
- Not accounting for TDS correctly, leading to disputes with the buyer at closing
Getting It Right
Because this sits at the intersection of property law, tax law, and FEMA, it is worth having the transaction reviewed by an advocate who regularly handles NRI matters, alongside your chartered accountant for the tax and repatriation side.