Sale of Flat to NRI Buyer in India vs. NRI Seller Selling Flat to Indian Resident
- CA Umang Jain
- 20 hours ago
- 2 min read
The real estate transaction rules vary depending on whether a property is being sold to an NRI buyer in India or when an NRI sells property in India to a resident Indian. Both situations involve compliance under the Income Tax Act and the Foreign Exchange.
Particulars | Sale of Flat to NRI Buyer in India | NRI Seller Selling Flat to Indian Resident |
Governing Law | Income Tax Act, 1961 + FEMA Regulations | Income Tax Act, 1961 + FEMA Regulations |
Status of Buyer/Seller | Buyer – NRI (Non-Resident Indian / OCI) | Seller – NRI; Buyer – Resident Individual |
TDS / Tax Deduction | Sec. 194-IA applies → 1% TDS if sale consideration ≥ ₹50 lakh | Sec. 195 applies → 20% TDS (plus surcharge & cess) on capital gains payable by NRI seller |
PAN Requirement | PAN mandatory for both seller & buyer (for Form 26QB filing) | PAN mandatory for NRI seller & resident buyer (for Form 27Q reporting) |
Mode of Payment | Payment must be from NRE/NRO account of NRI buyer | Payment must be made in INR through normal banking channel to NRI’s NRO account |
Repatriation Rules | NRI buyer may repatriate proceeds subject to FEMA | NRI seller can repatriate up to USD 1 million per financial year (with CA certificate in Form 15CB/15CA) |
Compliance Forms | Buyer files Form 26QB for TDS compliance | Resident buyer deducts & deposits TDS using Form 27Q and files return |
Taxation in India | Seller taxed on capital gains in India | NRI seller taxed on capital gains in India; Resident buyer has no tax at purchase |
Other Regulations | NRI cannot buy agricultural land, plantation, or farmhouse | NRI can sell any property (including inherited) to a resident Indian |
Practical Issues | Without PAN of buyer, TDS compliance cannot be completed | Buyer must ensure correct TDS deduction & remittance, else liability shifts |
Conclusion
Whether you are selling a flat in India to an NRI or buying from an NRI seller, the key lies in TDS compliance, FEMA conditions, and correct tax disclosures. The buyer must ensure proper deduction and deposit of TDS, while the NRI seller must comply with repatriation limits and capital gains taxation. Considering the complexities of cross-border transactions, it is strongly advisable to consult a Chartered Accountant or legal advisor before proceeding, to ensure compliance with Indian tax and FEMA regulations.
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Regards
CA Umang Jain
+91 96323-32850
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