What are the Tax Norms for NRIs Who Sell Properties in India?

With a significant chunk of NRIs investing in real estate in India, it’s natural that you would be interested to know about the tax implications when you sell these properties off. In this case, you should be knowing that there’s no special provision or compulsion for NRIs when it comes to real estate selling in India. Therefore, the norms applicable for NRIs and Indian residents would be the same.

However, there is a difference in the period during which you would be holding the property. In case you hold a property for a period exceeding two years, the authorities would consider it to be a long-term capital asset. Accordingly, you would have to pay 20% tax on long-term capital gain. Again, there would be a cess and surcharge that you have to pay. However, if you hold the property for less than two years, it would be a short-term capital asset. In this case, the tax would be applicable at the seller’s tax rates.

The capital gain is calculated on the period of holding. If you hold a short-term capital asset, it would be calculated as the difference between the acquisition cost and sales. Any cost of improvement would also be considered. If you sell off a long-term capital asset, there would be an adjustment in the acquisition and improvement costs considering inflation. In this case, the cost would be calculated on the basis of the inflation index that the CII (Central Government) would notify each year.

Given the booming real estate market in India, NRIs can significantly benefit from investing in properties at this juncture.