Selling Inherited Property in India:
If you’re an NRI who inherited property in India—maybe from your parents or grandparents—you might be wondering, “Can I sell it?” and more importantly, “What about taxes?”
This guide explains everything NRIs need to know before selling inherited property in India—clearly and without the jargon.
Table of Contents
Can NRIs Sell Inherited Property in India?
Yes, NRIs can legally sell inherited residential or commercial property in India.
You can sell it to an Indian resident, another NRI, or a Person of Indian Origin (PIO), depending on the type of property.
Example: Anil, an NRI based in the US, inherited a flat in Pune from his parents. He sold it to a local buyer in India after completing the required formalities and repatriated the funds under FEMA rules.
Step-by-Step: Selling Inherited Property as an NRI
✅ Step 1: Get Property Title Transferred
Ensure the property is transferred in your name by submitting the will or succession certificate to local authorities.
This step is crucial before you can sell.
✅ Step 2: Obtain PAN and Link It to Property
If you don’t already have a PAN card, apply for one in India.
You’ll need it for sale registration and paying applicable taxes.
✅ Step 3: Find a Buyer and Finalize the Deal
Make sure all paperwork is clear. It helps to involve a property lawyer who understands NRI-specific laws and local regulations.
✅ Step 4: Pay Capital Gains Tax (if applicable)
Once the sale is complete, capital gains tax applies—depending on how long the property was held.
How Is Capital Gains Tax Calculated for NRIs?
🔸 Long-Term Capital Gains (LTCG)
- If the inherited property was held for more than 2 years, it qualifies as long-term
- Taxed at 20% with indexation benefits
- Indexation adjusts for inflation over the years
🔸 Short-Term Capital Gains (STCG)
- If sold within 2 years of inheritance, taxed as per applicable income tax slab
Note: The holding period includes the original owner’s holding period too.
Example: Priya inherits a home from her father, who bought it in 2000. She sells it in 2025. Since the total holding is more than 2 years, she qualifies for LTCG and benefits from indexation.
What Is Indexation?
Indexation adjusts the purchase cost of property for inflation using the Cost Inflation Index (CII).
This reduces your taxable gain and lowers your final tax outgo.
Tip: Always consult a tax advisor to calculate indexation correctly before filing returns.
TDS Rules When NRIs Sell Property
Under Indian law, when an NRI sells property, the buyer must deduct TDS (Tax Deducted at Source) before making payment.
- TDS is 20% on LTCG
- Plus applicable surcharge and cess
- If no PAN is provided, TDS can go up to 20.8% or more
You can apply for a lower TDS certificate from the Income Tax Department before the sale to avoid excess deduction.
Repatriating the Sale Proceeds
Once you pay all taxes, you can repatriate the net proceeds abroad, subject to FEMA rules.
- Up to USD 1 million per financial year
- Through your NRO account, after submitting Form 15CA/15CB
- Must provide sale deed, tax paid proof, and inheritance documents
Example: Ravi sold his inherited flat in Mumbai for ₹1.5 crore. After paying LTCG tax and using Form 15CA/CB, he repatriated the funds to his US bank account in two tranches under the USD 1 million limit.
Common Mistakes to Avoid
- Selling without completing legal inheritance formalities
- Ignoring TDS or capital gains tax obligations
- Not applying for lower TDS certificate in advance
- Forgetting to get valuation for indexation purposes
- Trying to repatriate funds without following FEMA rules
Actionable Tips for NRIs
- Keep copies of all documents—will, death certificate, property papers
- Use professional help for sale agreement, tax filing, and remittance
- File your Indian tax return to claim any refund on excess TDS
- Plan the sale early in the financial year if repatriating large amounts
Frequently Asked Questions (FAQs)
1. Do NRIs need to pay tax when selling inherited property in India?
Yes, NRIs are required to pay capital gains tax on the sale of inherited property. The applicable tax rate depends on the holding period of the asset.
2. What type of capital gain applies—short-term or long-term?
If the property was held for more than 24 months, it qualifies as a long-term capital gain. If sold within 24 months, it is treated as a short-term capital gain.
3. Can NRIs claim any tax exemptions?
Yes, NRIs can claim exemptions under Section 54, 54EC, or 54F by reinvesting the capital gains in another residential property or specified bonds.
4. Is TDS applicable when an NRI sells inherited property?
Yes, the buyer must deduct TDS at 20% (plus surcharge and cess) on long-term gains. This amount is deposited with the Income Tax Department.
5. Can the sale proceeds be repatriated abroad?
Yes, up to USD 1 million per financial year can be repatriated after paying taxes. Proper documentation and Form 15CA/CB are required for repatriation.
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Conclusion
Selling inherited property in India as an NRI is completely doable—but needs a little planning.
By understanding capital gains tax, documentation, and repatriation rules, you’ll protect your wealth and make the process smooth.
Don’t wait until it’s urgent.
Start early, stay compliant, and work with trusted legal and tax advisors.