Arthgyaan

Supporting everyone's personal finance journey

Complete Tax Guide for NRIs Selling Land in India

This article simplifies the process of selling land in India for NRIs, offering clear insights on how to manage TDS deductions, understand the differences between urban and rural agricultural land, and calculate capital gains tax.

Complete Tax Guide for NRIs Selling Land in India


Posted on 04 Sep 2024
Author: Sayan Sircar
12 mins read
📢Join 3400+ readers on WhatsApp and get new post notifications!

This article simplifies the process of selling land in India for NRIs, offering clear insights on how to manage TDS deductions, understand the differences between urban and rural agricultural land, and calculate capital gains tax.

Complete Tax Guide for NRIs Selling Land in India

This article is a part of our detailed article series on property deals between an NRI seller and a resident Indian buyer. Ensure you have read the other parts here:

📚 Topics covered:

What taxes are due when an NRI sells land in India?

Three types of tax must be calculated whenever an NRI sells land in India:

  • Tax Deducted at Source (TDS) in India
  • Capital Gains Tax in India
  • Capital Gains Tax in the NRI’s home country (with or without DTAA benefit)

We have covered TDS and Capital Gains in detail here: How should NRIs sell property in India?

If you are a resident Indian selling land in India, see this article instead: Complete Tax Guide for Resident Indians Selling Land in India

What is the TDS when an NRI sells land in India?

Tax Deducted at Source (TDS) is the income tax deducted before the income is given to you

All property deals by NRI sellers, without exception, fall under the TDS rules specified in Section 195 of the Income Tax Act. The TDS and payment rules are:

  • The buyer pays TDS, at 20% or a higher rate, to the income tax department and the rest of the sale amount to the NRI seller’s NRO account.
  • The NRI seller receives only the post-TDS amount in their NRO account.
  • The TDS is adjusted against capital gains and tax on other income once the NRI seller files their income tax return in India.
  • The buyer will deposit the TDS and give the seller Form 16A from the income tax website.
  • TDS is not capital gains tax. That gets calculated separately.

Did you know that we have a private Facebook group which you can join for free and ask your own questions? Please click the button below to join.

What is the Capital Gains Tax when an NRI sells land in India?

Capital Gains Tax when an NRI sells land in India depends on whether:

  • the land is Agricultural Land or not
  • if it is an Agricultural Land, what kind of Agricultural Land it is: urban or rural

Note: NRIs cannot purchase agricultural land in India. They can either purchase it before becoming NRI, i.e. while they were resident Indians, or can inherit agricultural land even if they are NRIs. The selling of agricultural land by NRIs is allowed.

Urban agricultural land is situated close to a small population centre (shortest aerial distance and population as per the last census) as per the table below:

Distance Population
Less than 2 KM More than 10,000
More than 2 KM but Less than 6 KM More than 1,00,000
More than 6 KM but Less than 8 KM More than 10,00,000

Any agricultural land which is not Urban agricultural land is classified as Rural agricultural land which is not a capital asset and therefore tax-free when sold.

Land records maintained by the municipality or equivalent body will give you the data for this distinction.

Once you know the type of land, the table below tells you what is the taxation applicable:

Type Urban Agri Rural Agri Non Agri
Capital Asset Yes No Yes
LTCG Rate 12.5% No tax 12.5%
STCG Rate 30.0% No tax 30.0%

Irrespective of the type of land you are selling, TDS will be applicable.

How does the TDS computation work when an NRI sells land in India?

Effective TDS Rate = Base TDS Rate * (1 + Surcharge %) * (1 + Cess %)

where Base TDS Rate = 12.5% (long-term), Cess = 4%, Surcharge = 0, 10% or 15% (for property sold after 2 years of purchase)

and where Base TDS Rate = 30% (short-term), Cess = 4%, Surcharge = 0, 10% or 15% (for property sold before 2 years of purchase)

This effective TDS rate applies to the registration value of the land:

  • Less than ₹50 lakhs: TDS Rate = 12.5% * (1 + 0%) * (1 + 4%) = 13.00%
  • ₹50 lakhs to ₹1 crore: TDS Rate = 12.5% * (1 + 10%) * (1 + 4%) = 14.30%
  • ₹1 crore or more: TDS Rate = 12.5% * (1 + 15%) * (1 + 4%) = 14.95%
  • ₹2-5 crore: TDS Rate = 12.5% * (1 + 25%) * (1 + 4%) = 16.25%
  • ₹5 crore or more: TDS Rate = 12.5% * (1 + 37%) * (1 + 4%) = 17.81%

Warning: For NRI sellers, their PAN must be marked as NRI (to get around the Aadhaar-PAN linkage rule). Otherwise TDS will not get refunded even after Income tax return filing.

For deals after 23-Jul-2024 (as per Union Budget 2024)

Here are some sample TDS numbers for various sale values for deals after 23-July-2024 (using base TDS rate of 12.5% for properties held for more than 2 years)

Registration value TDS Rate Buyer Pays to IT Buyer Pays to Seller Seller gets in NRO
₹25 lakhs 13.00% ₹3.25 lakhs ₹21.75 lakhs ₹21.75 lakhs
₹50 lakhs 13.00% ₹6.50 lakhs ₹43.50 lakhs ₹43.50 lakhs
₹75 lakhs 13.00% ₹9.75 lakhs ₹65.25 lakhs ₹65.25 lakhs
₹1 crore 14.30% ₹14.30 lakhs ₹85.70 lakhs ₹85.70 lakhs
₹1.5 crores 14.95% ₹22.43 lakhs ₹127.58 lakhs ₹127.58 lakhs
₹2 crores 14.95% ₹29.90 lakhs ₹170.10 lakhs ₹170.10 lakhs
₹3.5 crores 16.25% ₹56.88 lakhs ₹293.13 lakhs ₹293.13 lakhs
₹5 crores 17.81% ₹89.05 lakhs ₹410.95 lakhs ₹410.95 lakhs

For deals before 23-Jul-2024

Here are some sample TDS numbers for various sale values for deals prior to 23-July-2024 (using base TDS rate of 20%)

Registration value TDS Rate Buyer Pays to IT Buyer Pays to Seller Seller gets in NRO
₹25 lakhs 20.80% ₹5.20 lakhs ₹19.80 lakhs ₹19.80 lakhs
₹50 lakhs 22.88% ₹11.44 lakhs ₹38.56 lakhs ₹38.56 lakhs
₹75 lakhs 22.88% ₹17.16 lakhs ₹57.84 lakhs ₹57.84 lakhs
₹1 crore 23.92% ₹23.92 lakhs ₹76.08 lakhs ₹76.08 lakhs
₹1.25 crores 23.92% ₹29.90 lakhs ₹95.10 lakhs ₹95.10 lakhs
₹1.50 crores 23.92% ₹35.88 lakhs ₹114.12 lakhs ₹114.12 lakhs
₹1.75 crores 23.92% ₹41.86 lakhs ₹133.14 lakhs ₹133.14 lakhs
₹2 crores 23.92% ₹47.84 lakhs ₹152.16 lakhs ₹152.16 lakhs

Also read
The first SGB issued in Nov 2015 has given 128% return in 8 years. Is that good or bad?

How should an NRI pay the lowest tax on capital gains on land sales?

Short-term capital gains tax is 30% + cess for when sold within two years.

Long-term capital gains tax is 12.5% + cess for when sold after two years without indexation.

TDS rates are also revised to 12.5% (long-term) and 30% (short-term) with cess and applicable surcharge

Union Budget 2024 revised the long-term capital gains tax rules for land:

How can an NRI get the land sale money out of India?

Proceeds from land sale go into the NRO account. There is no role of the NRE account here.

You must engage a CA to repatriate this amount to your country of residence. You can transfer up to $1 million a year out of India as an NRI.

We have covered the complete process in detail here: The complete guide for transferring money to an NRE account

How much capital gains tax will an NRI pay in their home country due to land sales in India?

Most countries (including India non-surprisingly) have tax on global income. As soon as the remittance from India hits your foreign account, the foreign bank will report the transaction, due to size, to the income tax authorities (e.g. the IRS for the US, HMRC for the UK etc.). You will have to pay capital gains (or equivalent tax) in your home country.

If the Double Taxation Avoidance Agreement (DTAA) is applicable, then any capital gains tax already paid (or to be paid in India) can be deducted from the tax due in your home country.

Related Articles

What's next? You can join the Arthgyaan WhatsApp community

You can stay updated on our latest content and learn about our webinars. Our community is fully private so that no one, other than the admin, can see your name or number. Also, we will not spam you.

For resident Indians 🇮🇳:


For NRIs 🇺🇸🇬🇧🇪🇺🇦🇺🇦🇪🇸🇬:


Share on WhatsApp:

To understand how this article can help you:

If you have a comment or question about this article

The following button will open a form with the link of this page populated for context:

If you liked this article, please leave us a rating

The following button will take you to Trustpilot:

Discover an article from the archives

Previous and next articles:



Latest articles:



Topics you will like:



Next steps:

1. Email me with any questions.

2. Use our goal-based investing template to prepare a financial plan for yourself.

Don't forget to share this article on WhatsApp or Twitter or post this to Facebook.

Discuss this post with us via Facebook or get regular bite-sized updates on Twitter.

More posts...

Disclaimer: Content on this site is for educational purpose only and is not financial advice. Nothing on this site should be construed as an offer or recommendation to buy/sell any financial product or service. Please consult a registered investment advisor before making any investments.

This post titled Complete Tax Guide for NRIs Selling Land in India first appeared on 04 Sep 2024 at https://arthgyaan.com


We are currently at 499 posts and growing fast. Search this site:
Copyright © 2021-2024 Arthgyaan.com. All rights reserved.