Selling Inherited Property in India as an NRI: Tax, TDS and the Repatriation Sequence

Most NRI property sales go wrong in the same way: the steps are done out of order, and the seller's own money sits stuck — over-withheld as TDS or blocked at the remittance stage. Done in sequence, the entire process is predictable. Here is that sequence.

Step 1 — Perfect the title (before anything else)

Inheritance transfers ownership by operation of law, but the records must catch up: mutation in municipal/revenue records, society transfer where applicable, and the supporting chain — death certificate, will/probate or legal-heir certificate, and a family settlement or relinquishment deed if other heirs are releasing shares. Buyers' lawyers will demand this chain; assembling it after finding a buyer wastes the best offers.

Step 2 — Understand your capital gains before pricing

• Cost step-up: your cost of acquisition is the previous owner's cost, and the holding period includes theirs — inherited property held long by a parent is almost always a long-term asset.
• Pre-2001 assets: where the previous owner acquired before the base date, fair market value as on 1 April 2001 can be adopted as cost — a valuation report is worth obtaining early.
• Rates and indexation: the LTCG regime for property has been amended in recent years — compute under the current rules (and where options exist, compute both ways) before you commit to a price and timeline.
• Reinvestment exemptions: Sections 54 (another residential house) and 54EC (specified bonds, within the time limit) can eliminate or defer much of the tax if planned before the sale deed, not after.

Step 3 — The lower-TDS certificate (the step everyone skips)

When the seller is a non-resident, the buyer must withhold under Section 195 — and the default deduction applies to the sale consideration, not your actual gain. On an inherited property with stepped-up cost, that routinely over-withholds by a wide margin.

Practical notes: the buyer needs a TAN to deposit non-resident TDS (unlike the resident 194-IA route), and the certificate is buyer-specific — lock the buyer before filing.

Step 4 — Sale, deposit and the return

Sale proceeds go to your NRO account. The buyer deposits TDS and issues Form 16A; you file your Indian return for the year, computing actual gains, claiming the TDS, and claiming any exemptions executed. Keep the complete file — valuation report, inheritance chain, sale deed, TDS certificates — both for the assessment and for your bank.

Step 5 — Repatriation

Moving the money abroad runs under the USD 1 million per financial year facility from NRO balances (current limit — verify). The bank will require Form 15CA, and a Form 15CB certificate issued by a chartered accountant confirming taxes on the funds are settled (we coordinate this through independent chartered accountants), plus the source trail: sale deed, inheritance documents, TDS proof. A clean file clears in days; a patchy one bounces between bank compliance teams for weeks.

The treaty and home-country layer

Your country of residence may also tax the gain, with credit for Indian tax under the applicable DTAA — the Indian computation and TDS certificates become the evidence for that credit. Coordinate both filings; the sequencing of who claims what credit differs by country (US, UK, Australia and the Gulf all behave differently).

The whole sequence in one line each

1. Perfect title and heirship papers
2. Compute gains under current rules; plan exemptions
3. Form 13 lower-TDS certificate before the deed
4. Sale → NRO; buyer's TDS; your Indian return
5. 15CA/CB + source file → repatriate within the annual limit
6. Home-country return with foreign tax credit

Educational content only, not professional advice. Capital-gains rates, indexation rules, TDS rates and remittance limits are amended frequently — verify the current legal position for your facts and year of sale. Last reviewed: August 2026.