The below content is purely for informational purposes and is not intended to constitute advisory of any kind. Please note, these are in-depth articles which are best viewed on large screen devices like laptops, desktops and tablets. The position reflected in this article has been updated as of March 15, 2025 basis the Union Budget 2025-2026 updates.

Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) frequently include real estate (or immovable property) as a part of their investment portfolio. That being so, there could be various reasons for which you may want to sell your immovable property.

Some of the points for you to consider for the sale of immovable property in India are:

Identification of the buyer and eligibility

Subject to the relevant Foreign Exchange Management Act, 1999, (FEMA) regulations, as an NRI or an OCI, you may sell any residential or commercial property in India to:

• A person resident in India; or
• Any NRI/OCI

You can also sell agricultural land, plantation property, or farmhouses in India to a resident Indian but not to another NRI or OCI.

An NRI or OCI who has acquired immovable property in India in accordance with the foreign exchange laws in force at that time can sell such property to an Indian resident, provided:

• The transaction takes place through banking channels in India; and
• Indian resident is not otherwise prohibited from such acquisition

Repatriation of the sale proceeds

Broadly, the authorised dealer (bank) may allow repatriation of the sale proceeds (from the sale of property other than agricultural land, farmhouse and plantation property) outside India, under the following conditions:

• The property was acquired in accordance with the provisions of the foreign exchange law in force at the time of acquisition
• The payment for the acquisition of the property was paid in foreign exchange received through appropriate banking channels or out of the funds held in a Foreign Currency Non-Resident Bank (FCNR (B)) account or Non-Resident External (NRE) account
• Repatriation of sale proceeds for residential property is restricted to maximum of two such properties. Sale proceeds from 3rd property onwards shall be repatriable under USD 1 Million scheme.
• Depending on the circumstances prevailing at the time of sale of the property in India, you may also require an approval from the Reserve Bank of India (RBI) for the repatriation of sale proceeds. Also note that the authorised dealer (bank) may allow an NRI to remit up to USD 1 million per Financial Year (April-March). This amount is inclusive of:
  • The balances held in their Non-Resident Ordinary Account (NRO)
  • Sale proceeds of assets; or
  • Assets acquired in India by way of inheritance.

In case you want to remit more that USD 1 million in a FY, you should seek approval of RBI by applying through your authorised dealer (bank). RBI grants approval on a case-to-case basis.

ICICI Bank customers can get in touch with their relationship manager for more details.

Depending on the circumstances prevailing at the time of sale of the property in India, you may also require an approval from the Reserve Bank of India (RBI) for the repatriation of sale proceeds. Also note that the authorised dealer (bank) may allow an NRI to remit up to USD 1 million per Financial Year (April-March). This amount is inclusive of:

• The balances held in their Non-Resident Ordinary Account (NRO);
• Sale proceeds of assets;
• Assets acquired in India by way of inheritance

In case you want to remit more than USD 1 million in a FY, you should seek approval from the RBI by applying through your authorised dealer (bank). The regulator grants approval on a case-to-case basis.

Tax considerations for NRI selling property in India

When selling immovable property, it is important to consider the capital gains tax.

The Capital gains on sale of Immovable properties may be classified into Long Term or Short-Term Capital Asset based on the period of holding as follows:

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Please note - Immovable property classified as Rural Agricultural Land under the provisions of the Act is not considered a Capital Asset. Consequently, any gains arising from its transfer are not subject to taxation. However, for land to qualify as Rural Agricultural Land, it must meet specific conditions prescribed under the Act.

If the property has been inherited/gifted then you also need to include the period of ownership of the previous owner. Long-term capital gains generally attract lower tax rates as compared to short-term capital gains.

In certain countries, sale of immovable property may be taxed at normal rates rather than the special rates applicable in India. Therefore, it is advisable to consult your tax advisor before undertaking an immovable property transaction in India.

How to calculate capital gains tax?

The sale of immovable property is subject to capital gains tax in India. The capital gains is calculated as under:

• Full value of consideration:

  Full value of consideration is an actual value that has been received on sale of immovable property.

  The actual sale consideration should be compared with the Stamp Duty Value, which is the value assessed at the time of property registration by the State Government's Registration Authority in India. For capital gains calculation, the higher of the two - actual sale consideration or Stamp Duty Value -is considered as the full value of consideration.

  However, as per the recent amendment, Stamp Duty Value will be considered as the Full Value of Consideration only if it exceeds the actual sale consideration by more than 110%

  Illustrative: Computation of Full Value of Consideration for the purpose of calculating Capital Gains in case of Sale of Immovable Property is as follows:

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  Particulars	Amount (in ₹)	Amount (in ₹)
  Sale consideration (A)	100
  110% of A (B)	110
  Stamp Duty Value as on date of Sale (C)	120
  Full Value of Consideration		120

  However, in the above example if the stamp duty value on date of sale is ₹108, then the full value of consideration would be ₹108, as the stamp duty value is less than 110% of the sale consideration.

• Cost of acquisition or in case the property is inherited/gifted, cost of acquisition to the previous owner

• Cost of improvement undertaken by the seller or in case the property is inherited/gifted, cost of improvement undertaken by the previous owner

  
  

  If Property held prior to 1.4.2001:

  If the property was acquired or the cost of improvement was incurred before April 1, 2001, then the cost of acquisition would be higher of:

  
  

• Actual cost of acquisition of the property or;
• Fair market value as on 1.4.2001.

However, as per recent amendment in law, the fair market value as on April 1, 2001, has been capped as not exceeding the 'stamp duty value' of the property as on April 01, 2001. Further, the term 'stamp duty value' has been defined to mean the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property.

• Expenditures incurred for the sale/transfer of such immovable property.

   

NRIs are entitled to claim exemption from the capital gain tax if they reinvest long term capital gains /net sale consideration into following assets.

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Note:

1. From FY 2020-21, the exemption can be claimed for the purchase or construction of 2 house properties if the amount of long-term capital gains does not exceed ₹2 crores. This option can be availed once in a lifetime, i.e. once this option is claimed, it cannot be further availed for the same or any succeeding financial years.

2. If the new residential property cannot be purchased or constructed before the due date of furnishing of return of income for the year of transfer, one has to hold/deposit with the bank, the unutilized capital gain proceeds of the old property in Capital Gains Account Scheme. The said amount has to be utilised for purchase of new residential property as per the period mentioned in above table. Any unutilised amount shall be charged as capital gain of the previous year in which the specified period expires.

What is the applicable Tax Deducted at Source (TDS) on sale of immovable property?

The TDS is to be withheld on entire sale consideration by the buyer (either resident or non-resident) as below:

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Disclaimer:

The contents of this article/infographic are meant solely for informational purposes. The contents are generic in nature and are not intended to serve as a substitute for specific advice on any matter whatsoever. The information is subject to updation, completion and verification and the applicable norms may keep changing materially from time to time. This information is also not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to applicable laws or would subject ICICI Bank Limited/its affiliates to any licensing or registration requirements. ICICI Bank Limited/its affiliates and their representatives shall not be liable for any direct or indirect losses or liability incurred arising in connection with any decision taken by any person on the basis of this content. Please conduct your own due diligence and consult your financial advisor before making any decision. Terms and conditions of ICICI Bank and third parties apply. ICICI Bank is not responsible for third party services. Nothing contained herein shall constitute or be deemed to constitute an advice, invitation or solicitation to avail any products/ services of third parties.