The weakening Rupee (₹83+ to USD) makes Indian real estate highly attractive for NRIs. However, navigating FEMA rules and taxation is critical.
1. TDS on Property Sale (The 20% Rule)
When an NRI sells property in India, the buyer must deduct TDS at source. This is not 1% like for residents, but much higher:
- Long Term Capital Gains (LTCG): 20% TDS (if held > 2 years).
- Short Term Capital Gains (STCG): 30% TDS (if held < 2 years).
Note: You can apply for a 'Lower Deduction Certificate' to reduce this if your actual tax liability is lower.
2. Repatriation Limits
Under the Liberalised Remittance Scheme (LRS), an NRI can repatriate up to USD 1 Million per financial year from the sale proceeds of assets in India. This requires a certificate (Form 15CB) from a Chartered Accountant.
3. No Agricultural Land
NRIs can buy residential and commercial properties freely, but they are strictly prohibited from buying agricultural land, farmhouses, or plantation properties without specific RBI approval.