Key takeaways
- India: 12.5% on long-term gains; TDS on the full price unless you get a Form 128 certificate.
- USA: taxed again at home, with credit for the Indian tax.
- Plan the certificate, exemptions and US$1 million repatriation route before signing.
Quick answer: India taxes the gain first (12.5% on long-term gains plus surcharge and cess) and the buyer deducts TDS, usually on the whole price unless you get a lower TDS certificate. USA may also tax the gain, with credit for the Indian tax. Plan the certificate and the transfer before you sign.
The India side (same wherever you live)
| Point | Rule for NRIs (2026-27) |
|---|---|
| Long-term gain (held over 24 months) | 12.5% without indexation, plus surcharge and 4% cess. The 20%-with-indexation option for older property is only for resident individuals. |
| Short-term gain | Taxed at your slab rates |
| TDS | The buyer deducts TDS, normally on the whole sale price, unless you get a lower-deduction certificate first. Surcharge adds 10% above ₹50 lakh and 15% above ₹1 crore |
| Lower TDS certificate | Apply online (TRACES) for a Lower/Nil Deduction Certificate (LDC) in Form 128 (formerly Form 13) before the sale, based on your actual gain |
| Exemptions | Reinvest in a house in India (capped at ₹10 crore) or in specified bonds within 6 months (up to ₹50 lakh, 5-year lock-in) |
| Getting money out | From your NRO account, up to US$1 million a financial year with Forms 15CA and 15CB. If you bought with foreign exchange, that amount can go back for up to two homes |
| Refund | File an Indian return to get back TDS that was more than your actual tax |
Mechanics in detail: TDS on sale of property by NRI, the Form 128 certificate and the property capital gains calculator.
The US side
- US capital gains tax: long-term gains (held over a year) at 0%, 15% or 20%, plus the 3.8% Net Investment Income Tax above the income thresholds.
- The gain is computed in US dollars using exchange rates at purchase and sale. Rupee depreciation means your dollar gain is often smaller than your rupee gain.
- Foreign tax credit (Form 1116): Indian tax on the gain is generally creditable against US tax on that gain. It does not reduce the NIIT.
- Report the sale on Form 8949 and Schedule D. Indian bank accounts holding the proceeds go on FBAR and, above the thresholds, Form 8938.
The order that saves the most
- Before you sign: work out the real gain (purchase cost, improvement costs, transfer expenses) and decide on any reinvestment.
- Apply for the lower TDS certificate so the buyer deducts on your gain, not the full price. It takes a few weeks, so start early.
- At the sale: make sure the buyer deposits the TDS correctly and gives you the TDS certificate.
- Move the money: Forms 15CA/15CB and your bank for the transfer abroad.
- File returns: in India (for any refund) and in your country of residence, claiming credit for the Indian tax.
Need it handled end to end? NRI property sale service. Other countries: UAE · UK · Canada · Australia · Singapore.
Sources
- Income Tax Department: TDS on sale of property by non-residents (section 195 / new Act equivalent)
- RBI: FAQs on remittance of assets by NRIs (USD 1 million facility)
- IRS: Topic 409, capital gains and losses
Frequently asked questions
Do I pay US tax on selling property in India?
Yes, if you are a US citizen, green card holder or US tax resident. Long-term gains are taxed at 0%, 15% or 20%, plus 3.8% NIIT above the thresholds, with a foreign tax credit for Indian tax on the gain (claimed on Form 1116).
Can the foreign tax credit offset NIIT on an Indian property sale?
Generally no. The foreign tax credit reduces regular US income tax on the gain, but not the 3.8% Net Investment Income Tax.
How much TDS does a buyer deduct when an NRI sells property in India?
For long-term property (held over 24 months), 12.5% plus surcharge (10% above ₹50 lakh, 15% above ₹1 crore) and 4% cess, normally on the whole sale price unless the NRI has a lower-deduction certificate.
How much money can an NRI send abroad after selling property in India?
Up to US$1 million per financial year from the NRO account, with Forms 15CA and 15CB. If the property was bought with foreign exchange, that amount can be repatriated for up to two residential properties.
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.