TDS on NRI Property Sale in India: Form 15CA, 15CB, and Inherited Property

When a US-based NRI inherits and sells property in India, the buyer is legally required to deduct TDS (Tax Deducted at Source) before paying the seller. For NRIs, the TDS rates are significantly higher than for resident Indians, and repatriating the sale proceeds to a US bank account adds another layer of compliance through FEMA regulations and Form 15CA/15CB. Getting this wrong results in either overpaying tax by lakhs of rupees or having the remittance blocked entirely.

TDS Rates for NRI Property Sales

The buyer — not the seller — is responsible for deducting TDS and depositing it with the Indian government. For NRI sellers, the rates are:

Long-term capital gains (property held more than 2 years): For an NRI seller, TDS is typically 20% plus applicable surcharge and cess under the non-resident rules. The effective rate can reach 22.88% including surcharges for higher-value transactions.

Short-term capital gains (property held 2 years or less): TDS at the NRI's applicable income tax slab rate, which can be as high as 30% plus surcharge and cess.

For inherited property, the holding period includes the original owner's holding period. If your parent purchased the property in 2005 and you inherited it in 2026, the holding period is 21 years — comfortably long-term. The cost of acquisition for capital gains calculation is the original purchase price paid by the deceased, indexed for inflation using the Cost Inflation Index (CII).

The Form 13 Strategy: Reducing TDS Before the Sale

Without a lower or nil certificate, the buyer withholds at the applicable non-resident rate before paying the seller. The final capital gain is calculated using the sale price and indexed cost of acquisition, so the amount ultimately due may be lower than the amount withheld.

Form 13 is an application filed with the Income Tax Department under Section 197 requesting a lower or nil TDS certificate. If granted, the buyer deducts TDS at the reduced rate specified in the certificate.

File Form 13 before the sale closes. The jurisdictional Assessing Officer reviews the application and issues a certificate specifying the reduced TDS rate. Without this certificate, the buyer has no legal basis to deduct less than the statutory rate.

After the Sale: Form 15CA and Form 15CB

To move the sale proceeds from your NRO (Non-Resident Ordinary) account in India to your US bank account, the remitter files Form 15CA before the remittance; Form 15CB is required when the applicable taxability and amount conditions are met:

Form 15CB is a certificate issued by a practicing chartered accountant in India. The CA verifies that all Indian tax liabilities on the remittance have been discharged — the TDS has been deposited, any advance tax has been paid, and the transaction does not violate FEMA regulations. The CA reviews the sale deed, TDS certificates (Form 16A), the capital gains computation, and the DTAA (Double Tax Avoidance Agreement) between India and the US. This certificate typically costs INR 5,000 to INR 15,000 in CA fees.

Form 15CA is an online declaration filed by the remitter (you or your agent acting under a Power of Attorney) on the Income Tax e-filing portal before the remittance. When Form 15CB applies, the chartered accountant's certificate is handled through the e-filing workflow and used with Form 15CA Part C. The portal generates an acknowledgment number for the bank's remittance processing.

The practical sequence is to complete the applicable Form 15CA/15CB e-filing steps before the bank processes the outward remittance; confirm the bank's current document checklist.

FEMA Remittance Limits

The Foreign Exchange Management Act (FEMA) caps NRO account repatriations at $1 million USD per financial year (April to March). This limit applies to the net amount after tax — not the gross sale price.

If the sale proceeds exceed $1 million after tax, the excess must remain in the NRO account until the next financial year. For high-value properties, this means the repatriation may span two financial years, with fresh remittance documentation required for each tranche.

Inherited property sale proceeds must be deposited into an NRO account — not an NRE account — before repatriation; do not apply NRE-account rules to this workflow.

India-US DTAA: Avoiding Double Taxation

India has the primary right to tax capital gains on immovable property located in India (Article 13 of the DTAA). The US also taxes worldwide income; ask your US CPA whether a foreign tax credit is available for Indian taxes paid on the same gain.

Do not assume that an Indian payment automatically produces a full credit or eliminates additional US tax; the result depends on your US return and the applicable treaty rules.

One trap: the India-US DTAA covers income tax but provides zero relief for US federal estate tax. If the deceased was a non-domiciled visa holder (H-1B, L-1) with US-situated assets exceeding the $60,000 non-resident exemption, the estate may face a separate US estate tax liability of up to 40% on the excess — completely independent of the Indian property tax situation.

Common Mistakes

Buyer deducts TDS at the standard rate without Form 13. The NRI seller may have funds tied up until they file a tax return and claim any refund due.

Treating Form 15CB as universal. Form 15CB is required only when the applicable taxability and amount conditions are met; when it is required, include it with the Form 15CA workflow and the bank's other documents.

Exceeding the $1M FEMA limit in a single financial year. The bank blocks the excess remittance. If you are selling a high-value property, time the sale to straddle two financial years (sell in February, repatriate the first tranche before March 31, the remainder after April 1).

The Indian Dies in the US family guide includes a capital gains computation worksheet, a Form 13 application checklist, and a FEMA remittance planner with the step-by-step 15CA/15CB sequence.