NRI Selling Property in Punjab: Capital Gains Tax, TDS, the Lower-Deduction Certificate and Repatriation

Most of our NRI clients selling in Punjab are in Canada, the UK, the US or Australia, selling a house their parents built, an inherited plot, or a flat bought as an investment. The tax itself is often modest. The problem is the TDS — the buyer must withhold tax on the entire sale price, not on the gain — and the FEMA rules on getting the money out.

Handled in the right order, both are manageable. Handled after the deed, they are expensive. This guide sets out the order.

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The sequence

Stage	What happens	Who
1. Before the deal	PAN active, residential status updated on the e-filing portal; cost and holding records gathered	You and your CA
2. Price agreed	Compute the gain; apply for a lower-deduction certificate	Your CA
3. Registration	Sale deed executed in person or through a power of attorney	You or your attorney
4. Payment	Buyer deducts TDS (at the certificate rate, if issued), deposits it, files the TDS return	Buyer (needs a TAN)
5. Proceeds	Credited to your NRO account	Your bank
6. Return	File an Indian return for the year of sale; claim any excess TDS as refund	Your CA
7. Repatriation	Remit the money abroad with Forms 145 and 146	Your CA and bank

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How the gain is taxed for an NRI

Holding period	Tax
More than 24 months	12.5% on the long-term gain, without indexation
24 months or less	Slab rates on the short-term gain

There is no indexation option for non-residents. Since 23 July 2024, resident individuals selling property bought before that date can choose 20% with indexation if it is lower. That choice is written for residents only. An NRI selling a house bought in 2005 pays 12.5% on the full, un-indexed gain — which on old property can be a large number.

Inherited property keeps the history of the person you inherited from: their cost, and their holding period added to yours. For property acquired before 1 April 2001, the cost is its fair market value on 1 April 2001 (capped at the stamp-duty value on that date) — a registered valuer’s report for that date is usually worth having.

The exemptions work for NRIs. Reinvest in a residential house in India under Section 54 or 54F, or up to ₹50 lakh in specified bonds within six months under Section 54EC, and the gain is exempt to that extent. A house bought abroad does not qualify.

Surcharge applies at higher income levels (capped at 15% on long-term gains), with 4% cess on top. The full computation, with the stamp-duty value rules, is in our capital gains on sale of property guide.

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The TDS problem — and the certificate that solves it

When the seller is an NRI, the buyer cannot use the simple 1% Form 26QB route. They must deduct under the non-resident provision — Section 195 (Section 393(2) of the Income-tax Act 2025 for payments from 1 April 2026) — at the rate on the income: for a long-term sale, 12.5% plus surcharge and cess, applied to the whole consideration unless a certificate says otherwise. That works out to about 13% to 15% of the sale price. The buyer also needs a TAN and must file a quarterly TDS return (Form 144, formerly 27Q).

Worked example

You bought a flat in Mohali in 2015 for ₹55 lakh and sell it in tax year 2026-27 for ₹85 lakh, paying ₹1 lakh brokerage.

	Without a certificate	With a lower-deduction certificate
Long-term gain	₹29 lakh (₹85 lakh − ₹1 lakh − ₹55 lakh)	₹29 lakh
Actual tax (12.5% + 4% cess, no surcharge at this income)	about ₹3.8 lakh	about ₹3.8 lakh
TDS deducted by the buyer	about ₹12.2 lakh (on ₹85 lakh, with 10% surcharge and cess)	about ₹3.8 lakh
Money held up until your refund	about ₹8.4 lakh, for a year or more	Nil

The lower-deduction certificate is issued by the Assessing Officer on an application in Form 128 under Section 395 (formerly Form 13 under Section 197), filed online through TRACES. It specifies the rate the buyer may deduct and is issued for the specific buyer and transaction. Apply with the purchase deed, the sale agreement, the computation of the gain, and — if you are reinvesting — the planned exemption. Allow several weeks.

If the gain is fully covered by a planned Section 54 or 54EC reinvestment, the certificate can be for a nil or near-nil rate.

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Who can buy, and the agricultural-land rule

Under FEMA, an NRI or OCI may sell residential or commercial property to a person resident in India, to another NRI, or to an OCI.

Agricultural land, a plantation or a farmhouse is different. An NRI or OCI who inherited it may sell it only to a person resident in India who is a citizen of India. Selling to another NRI requires RBI approval.

Whether Punjab agricultural land is taxable at all depends on its location — rural agricultural land is not a capital asset. The distance-and-population test is in our Punjab property-sale guide.

If you cannot travel: the power of attorney

A sale can be registered through an attorney holding a specific power of attorney for the sale. Executed abroad, it must be attested by the Indian embassy or consulate (or apostilled, where the country is a party to the Hague Convention), and it must be stamped in India within three months of being received. Sub-registrars in Punjab examine these closely; a general power of attorney, or one stamped late, is a common reason for a registration to be held up. Give the attorney authority for the bank and tax steps too — receiving the payment into your NRO account, signing the TDS correspondence — so the sale does not stall waiting for you.

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Getting the money out: repatriation

Sale proceeds are credited to your NRO account. How much you can send abroad depends on how the property was paid for:

How you acquired the property	What you can repatriate
Bought with foreign exchange — remitted from abroad or paid from an NRE/FCNR account	Up to the amount paid in foreign exchange, for up to two residential properties; the rest goes through the USD 1 million route
Bought from rupee funds, or inherited	Up to USD 1 million per financial year from your NRO account, covering all your NRO remittances for bona fide purposes

Above USD 1 million in a year needs RBI approval through your bank.

The remittance paperwork (Income-tax Rules 2026, in force from 1 April 2026):

• Form 145 (formerly Form 15CA) — your declaration of the remittance, filed online. Above ₹5 lakh, Part C is used.
• Form 146 (formerly Form 15CB) — a chartered accountant’s certificate that the tax on the money has been paid or deducted, required for Part C.

Your bank will also ask for the sale deed, the TDS certificate and the CA’s certificate. It helps to have the Indian return filed first.

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The return, the refund and your country of residence

File an Indian return (ITR-2) for the year of sale, by 31 July following the end of the tax year. It reports the gain, claims any exemption, and recovers TDS deducted in excess of the actual tax. Without the return, excess TDS is simply lost.

Tax treaties. Under India’s treaties with Canada, the UK, the US and Australia, a gain on immovable property in India may be taxed in India. Your country of residence will generally also tax it but give credit for the Indian tax. Keep the Indian return, the TDS certificate and the challans: your overseas accountant will need them. The credit is usually for the actual Indian tax, not the excess TDS — another reason to get the certificate or the refund.

Your PAN matters. If your PAN is inoperative, or you have none, TDS is deducted at the higher rate of 20% or more. Before the sale, make sure the PAN is active and your residential status is updated on the e-filing portal.

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Mistakes we see most often

1. Signing first, planning later. Once the buyer has deducted 13–15% on the full price, the only route back is a refund after the return is processed.
2. Assuming indexation. NRIs compute the gain without it.
3. Letting the buyer use Form 26QB. That route is for resident sellers; on an NRI sale it leaves the buyer in default and your credit missing.
4. Selling agricultural land to an NRI relative. Without RBI approval, that is not permitted.
5. Not filing the Indian return. The excess TDS is the largest refund most NRI sellers will ever have — and it is only paid against a return.
6. Remitting without Forms 145 and 146. Banks will not process a large NRO remittance without them.

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How we handle NRI property sales

From abroad, by video call and email: we compute the gain, plan any reinvestment, file the lower-deduction certificate application, coordinate with the buyer on TAN and TDS, review the power of attorney before you execute it, file your Indian return, and issue the Form 146 certificate for repatriation. See our NRI and FEMA taxation services or real estate capital gains practice.

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Frequently Asked Questions

How much TDS is deducted when an NRI sells property in India?

For a long-term sale, the buyer deducts 12.5% plus surcharge and cess — about 13% to 15% — on the whole sale price, not on the gain, unless the NRI has a lower-deduction certificate. For a short-term sale, the rate follows the slab rates, usually 30% plus surcharge and cess.

How can an NRI reduce TDS on a property sale?

By obtaining a lower-deduction certificate from the Assessing Officer before payment. The application is made in Form 128 under Section 395 of the Income-tax Act 2025 (formerly Form 13 under Section 197), with the purchase and sale documents and a computation of the gain. The certificate sets a rate close to the actual tax, or nil if the gain will be reinvested under Section 54 or 54EC.

Do NRIs get indexation on property sold in India?

No. The option to compute tax at 20% with indexation for property bought before 23 July 2024 is available only to resident individuals and HUFs. NRIs pay 12.5% on the long-term gain without indexation.

How much money can an NRI send abroad after selling property?

Up to USD 1 million per financial year from the NRO account, which covers sale proceeds of property bought from rupee funds or inherited. Property bought with foreign exchange can additionally be repatriated up to the foreign exchange paid, for up to two residential properties. Forms 145 and 146 (formerly 15CA and 15CB) are needed for the remittance.

Can an NRI sell inherited agricultural land in Punjab?

Yes, but only to a person resident in India who is a citizen of India; a sale to another NRI needs RBI approval. Whether capital gains tax applies depends on whether the land is rural agricultural land, which is not a capital asset.

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Related reading

• Capital Gains Tax on Sale of Property in India: 12.5% or 20% with Indexation
• Capital Gains Tax on Property Sale in Punjab: Collector Rates and Agricultural Land
• Buying Property from an NRI: TDS under Section 195
• ITR for NRIs: DTAA and Repatriation
• NRI & FEMA Taxation Services