Selling Indian Property as an NRI: TDS, Repatriation and the Paperwork

An NRI sale is not more complicated in principle. It is more complicated in sequence — several things must happen in a specific order, each takes weeks, and starting them after you have a buyer is how three-month deals become nine-month deals.

The TDS problem

When the seller is a non-resident, the buyer is required to deduct tax at source at rates linked to capital gains, plus applicable surcharge and cess — materially higher than the small percentage that applies on a purchase from a resident.

Two consequences:

1. Buyers get nervous. Many have never done this and their own advisors flag it as complexity.
2. The seller's money is locked up until it is reconciled through a tax return.

The mitigation is applying to the income tax department for a lower deduction certificate, which sets the deduction closer to the actual liability. This takes time. Start it early.

The buyer also needs a TAN to deduct and deposit the tax, which is another step and another delay if discovered late.

The documents to have ready before listing

• Passport and visa or OCI card
• PAN — non-negotiable, and a surprising number of long-settled NRIs do not have one active
• The original title documents, or a clear plan for accessing them
• Previous sale deed and the chain
• Property tax receipts, up to date
• Society NOC and dues clearance
• The purchase price and date, for computing gains
• Records of any improvement expenditure claimed

Power of attorney

Most NRI sellers cannot be present for registration. A specific power of attorney — naming the property, the act, and the attorney — is the usual route.

Executed abroad, it typically needs notarisation and then attestation or apostille depending on the country, followed by registration or adjudication requirements in India that vary by state. Sub-registrars are strict, and a defective POA discovered on the registration date is a wasted trip for everyone.

Have it prepared and checked by an Indian lawyer months ahead.

Repatriation

Moving proceeds abroad runs through a defined banking process with documentation from a chartered accountant certifying that taxes are settled, and there are limits and conditions depending on how the property was originally acquired.

The bank will require the paperwork in a specific form. Involve the CA early rather than at the end.

The agent's actual job here

Not to advise on tax — you should not, and the rules change. Your job is sequencing:

1. Confirm PAN is active, before listing
2. Get the lower deduction certificate application started, before listing
3. Get the POA process started, before listing
4. Have a CA and a lawyer identified and briefed
5. Tell the buyer about the deduction at the first serious conversation, not at the agreement stage

An NRI sale where all four were started at the beginning closes in a normal timeframe. One where they start after the buyer appears does not.

Tax rates, thresholds and procedures change and vary by circumstance. Treat this as orientation and route the specifics to a chartered accountant.