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TDS on Property Sold by an NRI Under ‘FEMA’

TDS on Property Sold by an NRI Under ‘FEMA’

Are you curious to learn about TDS on property sold by an NRI under FEMA? Generally, TDS must be deducted whenever a property is purchased or sold. In addition, while paying the selling price, the buyer will deduct a certain amount. This amount is officially known as TDS and pay the remaining amount to the seller. In this case, the buyer must deposit the sum deducted with the income tax department.

Important Facts about TDS on Property

The amount to be deducted will be determined by the seller’s residence status. In addition, if the seller is a citizen of India, TDS will be taken at 1% of the sale price. But in case the seller is a non-resident Indian, the deduction will be done at a specified rate. This rate is determined by the amount of money received by the seller.

RemitX strongly advised you need to understand that buyer’s residential status should not be taken into account, only the seller’s residential status would be taken into account. This is important while doing calculations the amount of TDS to be deducted.

NRI Redistribution

This is the process an NRI transfers funds from their Indian accounts (NRE/NRO/FCNR (B)) to their bank account. This account is in the nation where the person currently resides. In addition in India, a US NRI can sell his property as an immovable asset. If those selling the property, they must have an NRO account. Even more, the proceeds of the sales are deposited into the NRO account. The principal and interest from their NRO account can be transferred to their abroad bank account. In a financial year, a million dollars in terms of currency can change the hands.

Required Documents for the Sale

  1. The property’s title should be in the name of the seller.
  2. Certificate of no objection
  3. Certificate of occupation
  4. Card with a pan
  5. Taxes on real estate
  6. The property is owned by a US citizen.
  7. A US resident became the owner of the property by inheritance. The person can purchase before earning NRI status, or purchase after attaining NRI status.

TDS on Sold Property

Basically, the Foreign Exchange Management Act applies to all property-related transactions such as NRIs. A Resident Indian or another NRI can easily buy an NRI’s home or commercial property. But, an NRI or PIO cannot buy or sell his property in terms of agricultural land, farmhouse, or plantation.


According to the latest rules in India, if a property is sold within two years of its acquisition. NRIs must pay a long-term capital gains tax of 20%. In addition, there is an applicable surcharge and cess on the sale price.

For example, if a property is sold before that time, NRIs must pay 30 per cent of the earnings. This is a short-term capital gains (STCG) tax, even with the relevant surcharges and cess. Furthermore, under different parts of IT law, NRIs can seek LTCG rebates.

Final Thoughts

To wrap up, you should learn about the tax ramifications of selling a home and repatriating the money. You should speak with a local tax specialist to get the best solution to your all questions. It is preferable to take assistance from the professional of the RemitX location near you.

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