I am a non-resident Indian (NRI) in Singapore owning residential property in India. Is there any difference in tax implications between selling my property to another NRI as opposed to an Indian resident? Is there any tax advantage if I sell to another NRI?
—Name withheld on request
Assuming you qualify as a Non-Resident (NR) of India for FY 2026-27, you would become taxable in India on any income that is received/deemed to be received in India, or accruing/deemed to accrue or arise in India.
Since the residential property is situated in India, capital gains arising from its sale would accrue in India and, accordingly, would be taxable in India. The capital gains tax implications would remain the same whether you sell the property to a resident Indian or to an NRI. If you have held the property for more than 24 months, then the gains would qualify as long-term capital gains and would be taxable at 12.5%, plus applicable surcharge and cess, without indexation. Whereas, if you have held the property for a period less than 24 months, then the gains would qualify as short-term capital gains and would be taxable at the applicable slab rates, plus applicable surcharge and cess.
Under Indian domestic tax law, the buyer is required to deduct tax at source (TDS) on payments made to a non-resident in respect of the sale of immovable property, with the tax deduction being computed by reference to the taxable capital gains rather than the entire sale consideration. In practice, however, to mitigate the risk of being treated as an assessee-in-default, buyers generally require the seller to obtain a lower deduction certificate from the tax authorities. In the absence of such a certificate, TDS is generally deducted on the entire sale consideration rather than on the capital gains.
As a tax resident of Singapore, you are eligible to claim the benefits of the India–Singapore Double Taxation Avoidance Agreement (DTAA). However, since the immovable property is situated in India, India retains the right to tax the capital gains arising from its sale under the DTAA too. Since Singapore generally does not tax capital gains derived by individuals from the sale of overseas property, taxes paid in India would be an actual cost for you, unless you are eligible to claim an exemption from long-term capital gains tax by reinvesting the gains in another residential house property in India or specified bonds subject to the applicable conditions and investment limits.
Under India’s foreign exchange laws, you can repatriate the entire sale proceeds arising from the sale of immovable property in India, subject to the conditions that the property was acquired in accordance with the foreign exchange laws in force at the time of acquisition and that the purchase consideration was paid using foreign exchange received through banking channels or funds held in an NRE or FCNR(B) account. Further, this facility is available for only two residential properties during your lifetime. If these conditions are not met, you can remit funds outside India under the $1 million remittance facility per financial year, subject to the applicable conditions.
Harshal Bhuta is co-founder at Ascentium India, a Singapore-headquartered professional services firm