Essential Rules Every NRI Must Follow Before Buying or Selling Property in India
The basic things every NRI must get right so they can protect their property and avoid unnecessary problems later. Before buying, owning, or selling property in India you must check the property papers properly, follow the right tax rules, handle tenants carefully, and make sure your money can be moved abroad without issues.
1. Due Diligence
An NRI (Non-Resident Indian) should do proper due diligence; that is, take reasonable steps to check and verify key details before making any property-related decision. This includes doing a deep title search to confirm ownership, checking for encumbrances such as loans, disputes, or legal claims on the property, reviewing the builder’s approvals such as RERA registration, Completion Certificate (CC), Occupancy Certificate (OC), and approved building plans, and verifying records and property tax payments.
2. Tax and FEMA compliance
For property sales in India, NRIs follow different tax rules than residents. When a resident Indian sells property, the buyer usually deducts only 1% TDS if the sale value exceeds Rs 50 lakh. But when an NRI sells property, the buyer must deduct TDS based on capital gains, which is much higher, typically 20% on long-term gains (plus surcharge and cess) or 30% on short-term gains, unless the NRI gets a lower-TDS certificate from the tax department. NRIs can pay sellers directly via normal Indian bank accounts, and using an NRE/NRO account is optional. Overall, NRIs just need to ensure proper TDS compliance and FEMA rules for repatriation, but the payment process itself is simple.
How to pay TDS on the sale of property by NRIs?
When a property is sold, the buyer has to deduct some tax (TDS) before paying the seller. Here’s how the process works in simple terms:
Step 1: Buyer gets a TAN.
- The person buying your property must get a TAN number.
- TAN is a special ID that allows them to deduct and deposit TDS legally.
Step 2: The buyer pays the TDS to the government.
- After deducting TDS from the amount they pay you, the buyer must deposit this tax to the Income Tax Department.
- This payment must be made by the 7th day of the next month.
Step 3: Buyer files a TDS return every quarter.
- Every three months, the buyer has to fill out and submit Form 27Q.
- This form is basically a report showing how much TDS has been deducted and deposited.
Step 4: Buyer receives Form 16A.
- Once the TDS return is filed, the government issues Form 16A to the buyer.
- This form is proof that the TDS was actually deposited.
Step 5: The buyer gives Form 16A to the seller.
- Finally, the buyer hands over Form 16A to you.
- You can use this form later if you want to claim a refund or when you repatriate money abroad (if applicable).
3. Remote maintenance
NRIs should work with reliable, well-known property managers and give the housing society (RWA) only a limited power of attorney so they can handle basic tasks like inspections. Use simple digital tools or dashboards to keep track of repairs, maintenance dues, and rent. When renting out your property, choose a leave and license agreement instead of a traditional lease because it makes moving out or ending the arrangement much easier for both sides.
4. Renting strategy
Check rental rates using independent sources, not just what brokers say, and keep an eye on how rental returns are trending. Also keep in mind that tenant responsibilities such as TDS deductions and related tax forms (26Q, 16A, 15CA/CB) can affect rent discussions. Also, review your tenant’s profile from time to time to make sure they continue to be a good fit.
5. Exit and repatriation
Regularly check market rents on your own instead of relying only on brokers, and keep an eye on how rental returns are trending. Remember that tenant tax requirements such as TDS deductions and forms such as 26Q, 16A, and 15CA/CB can affect rent discussions and paperwork. Also, make it a habit to review your tenants’ background and reliability from time to time so you stay aware of any changes that might impact your agreement.
