NRI Property Sale & Repatriation Rules India 2026 — FEMA, RBI, USD 1M Limit

1. Two Buckets — Repatriable vs Non-Repatriable

Every Indian property held by an NRI sits in exactly one of two FEMA buckets, and the bucket determines almost everything about how the sale proceeds can leave the country. The repatriable bucket covers property acquired with funds remitted from abroad through normal banking channels — typically credited via an NRE account, an FCNR(B) account, or a direct foreign currency wire. The non-repatriable bucket covers property bought using NRO funds, local rental income, dividends from Indian shares, or any income earned and taxed in India. The repatriable bucket is broad but capped at two residential properties per NRI under the FEMA 396/2019 Non-Debt Instruments Rules (the third residential property and beyond is treated as non-repatriable by default, even if bought with NRE money). Sale proceeds from these two repatriable units can be sent overseas without any annual cap and without RBI approval — subject only to TDS being deducted and the 15CA/15CB documentation chain being complete. The non-repatriable bucket is the more common situation. Most NRIs who lived in India before moving abroad bought their first flat with NRO/resident funds, and most rental income from any property gets paid into the NRO account. Sale proceeds from this bucket can only be repatriated through the USD 1 million per financial year window, which aggregates across all your NRO holdings — sale of property, maturity of FDs, sale of gold, gifted assets, and inherited wealth. Banks classify the funds at the credit stage, not at the remittance stage. If you sell a flat originally bought with NRE money but the buyer pays you via UPI into your NRO account, you have just contaminated the funds — the bank will treat that credit as NRO-bucket and apply the USD 1M cap. The safer route is to have the buyer wire the sale consideration directly into your NRE account (which they can do only if the original purchase was from NRE) or into an escrow account that the bank then sweeps into NRE based on supporting documents. You should obtain a written acknowledgement from your AD bank confirming the bucket classification for each property at the time of sale, before the funds settle. Asking the bank "which bucket is this in" is much harder after the credit has been received and tagged in the core banking system.

2. The USD 1 Million Per Financial Year Cap

The USD 1 million per FY cap is the single most important number for any NRI selling a property bought with NRO funds. The cap was first introduced in 2004 (raised from USD 100,000), and has not been revised since — it sits in Schedule III of the FEMA Non-Debt Instruments Rules 2019 and is operationalised by RBI circular A.P. (DIR Series) Circular No. 67 dated April 13, 2016. Three points about the cap. First, it is per individual, not per family or per property. A husband and wife who are both NRIs and jointly own one flat can together repatriate USD 2 million in a single FY (USD 1M each), but they need separate 15CA/15CB chains and the joint sale proceeds must be split into their respective NRO accounts in the demonstrated co-ownership ratio. Second, the cap aggregates across all NRO-bucket sources, not just property sales. If you have already used USD 600,000 of your annual cap to repatriate fixed deposit proceeds in a given FY, only USD 400,000 of property sale proceeds can be repatriated in the same FY. The remainder rolls into the next FY automatically, but only if the funds stay parked in your NRO account. Third, evidence is required. Banks ask for a self-declaration on bank letterhead listing all remittances made by the same individual under the USD 1M facility in the same FY, across all banks. If you bank with multiple AD banks, you are personally responsible for tracking the cumulative number — the income tax department also asks for this disclosure in the 15CA filing. The cap applies in the Indian financial year (April 1 to March 31), not the calendar year and not the country-of-residence tax year. Many NRIs in the United States make the mistake of trying to align repatriation with their US tax filing — banks reject this, the FEMA window is anchored to India FY only.

3. Inheritance — A Separate Category

Inherited property is a slightly more permissive category under FEMA. Section 6(5) of FEMA, read with Schedule III of the NDI Rules, treats property inherited by an NRI from a resident Indian (or from another NRI who originally acquired it as a resident) as fully repatriable on sale, without any cap on the amount. The same applies to property inherited from a person of Indian origin (PIO). However, the actual repatriation execution still flows through the USD 1 million per FY window. So in practice, a daughter who is a US-citizen NRI inheriting her mother's ₹6 crore Mumbai flat can repatriate the full ₹6 crore over the financial years, but capped at USD 1M each FY — meaning the full corpus moves out over roughly 7-8 years assuming an exchange rate around ₹83 per USD. The bank does not require a separate RBI approval for this, because the underlying funds are classified as inherited and the cap is just the operational limit. Documentation for inherited property repatriation is more demanding. The AD bank will need: (a) the original death certificate of the testator, (b) the registered will or a succession certificate / legal heir certificate issued by an Indian court, (c) the mutation certificate from the relevant municipal body showing the property in the heir's name, (d) the sale deed of the eventual sale, (e) 15CA/15CB, and (f) the standard PAN + TDS chain. A common trap is co-inherited property where one heir is resident and others are NRI. The resident heir is not subject to FEMA at all, and her share can be received in any Indian rupee account. The NRI heirs must each have their own NRO account, and the sale deed must explicitly apportion the consideration in the same ratio as the inheritance share — otherwise the bank will treat the entire amount as flowing through the NRI heir's NRO account, which complicates the bucket classification. Inherited agricultural land, farmhouse, or plantation property is special — under Section 6(5) NRIs and PIOs can hold these only if inherited (they cannot buy such property), but they can sell only to a person who is a resident Indian citizen. Repatriation of those sale proceeds follows the USD 1M cap.

4. The TDS Chain — Section 195 of the Income Tax Act

When the buyer of your property is a resident Indian and you (the seller) are an NRI, the transaction does not use Section 194-IA (the 1% TDS that applies for resident-to-resident property sales above ₹50 lakh). Instead it falls under Section 195, which mandates that the buyer deduct tax at source at the rates applicable to capital gains in the hands of a non-resident. For long-term capital gains (property held more than 24 months from acquisition), the basic rate is 20% on indexed gains. After the Health and Education Cess of 4% and applicable surcharge (10% for income ₹50L–₹1Cr, 15% for ₹1Cr–₹2Cr, 25% for ₹2Cr–₹5Cr, 37% for above ₹5Cr in the old regime), the effective LTCG TDS rate sits between ~23% and ~28.5% of the indexed gain. For short-term capital gains (held 24 months or less), the rate is 30% plus surcharge and cess, applied on the gross sale value minus cost. Critically, Section 195 TDS is applied on the entire sale consideration unless the seller obtains a Section 197 Lower Deduction Certificate (covered in the next section) that restricts deduction to the actual capital gain. So a ₹1 crore sale of a flat that the NRI bought 6 years ago for ₹40 lakh will see the buyer withhold roughly ₹23-28 lakh as TDS even though the actual LTCG may be only ₹40-45 lakh after indexation — leading to a large refund-cycle scenario. The buyer must obtain a TAN (Tax Deduction Account Number) before deducting — not just a PAN. The TDS must be deposited via Form 27Q (the quarterly TDS return for payments to non-residents) along with Challan ITNS 281, not Form 26QB which is for resident-to-resident transactions. The buyer then issues Form 16A to the NRI seller — this is the document the AD bank will demand at the time of repatriation. If the buyer does not have a TAN or does not know the Section 195 procedure (the most common scenario in tier-2 cities), the entire deal can stall. NRIs should educate the buyer or insist on a CA-assisted closing — failure to deduct under Section 195 is the buyer's liability, with interest under Section 201(1A) and penalty under Section 271C, but the practical consequence is that the NRI's repatriation gets blocked because the 15CB cannot be issued.

5. Section 197 Lower Deduction Certificate

The single most useful Indian tax filing for an NRI selling property is the Section 197 Lower Deduction Certificate (LDC). It is also called a NIL or lower TDS certificate. Filed via Form 13 on the TRACES portal (under the "Request for Form 13" tab), the LDC directs the buyer to deduct TDS at a lower rate (or in some cases nil) based on the actual estimated capital gain, instead of the default 20-30% on the full sale value. The application requires: (a) the proposed sale agreement or sale deed draft, (b) the original purchase deed and proof of payment from the time of acquisition (bank statements / TT advice slips), (c) a CA-prepared LTCG / STCG computation showing indexed cost, improvements with bills, transfer expenses, applicable Section 54/54EC/54F claims, and the net capital gain, (d) the NRI's PAN and residency proof, (e) the buyer's PAN and TAN, and (f) Form 13 itself. Processing time is typically 4–8 weeks from a complete application — though some Assessing Officers take longer, particularly for first-time NRI applications. The LDC is issued with a specific certificate number, a validity period (usually 3-6 months from issue), a maximum sale value covered, and the exact TDS rate the buyer must deduct (often 1-3% of sale value, sometimes higher depending on the gain). The buyer keys the LDC details into Form 27Q at the time of TDS deposit — the system cross-references the certificate number with the AO's order. If the certificate is valid and the deduction is at the rate specified, the entire withholding cycle compresses. Instead of a ₹25 lakh withholding followed by a ₹20 lakh refund cycle that takes 18-24 months, the NRI gets only ₹3-5 lakh withheld at source and the cash flow is dramatically improved. The LDC should be filed before the sale agreement is signed, ideally before the buyer is even identified — many AOs accept Form 13 with a placeholder for buyer details, to be updated by an addendum once the buyer is finalised. This way the LDC is in hand before the sale deed registration, and the repatriation closes within 4-6 weeks of completion instead of the typical 12-18 months.

6. The 15CA + 15CB Pair — Rule 37BB

Form 15CA and Form 15CB are the documentary backbone of any remittance out of India by a non-resident. The legal anchor is Rule 37BB of the Income Tax Rules 1962, which mandates that no person shall make a remittance to a non-resident chargeable to tax without first submitting a 15CA filing, and in most cases a corresponding 15CB certificate from a Chartered Accountant. Form 15CA is filed by the remitter (you, the NRI) on the income tax e-filing portal at incometax.gov.in. It has four parts. Part A is used when the total remittance in a financial year is less than or equal to ₹5 lakh and is chargeable to tax — no CA certificate is required. Part B applies when an order under Section 195(2) or 195(3) or a Section 197 LDC has been obtained — the order number is quoted. Part C is the most common form, used when the remittance exceeds ₹5 lakh and is chargeable to tax — it requires a corresponding 15CB. Part D applies when the remittance is not chargeable to tax (rare for property sales — typically only for inherited principal where the gain is exempt). Form 15CB is a certificate from an Indian Chartered Accountant uploaded on the same portal — it certifies the nature of the remittance, the applicable DTAA between India and the destination country (if any), the rate of TDS applied, the taxable amount, and confirms that all due taxes have been paid. The CA digitally signs the 15CB, and the acknowledgement number is then quoted in 15CA Part C. The sequence is rigid. The CA must first issue 15CB and obtain an acknowledgement number; only then can 15CA Part C be filed by the NRI; only then will the AD bank execute the remittance. Trying to file 15CA before 15CB is a common rookie mistake — the system will not accept it. Both forms can be filed online without physical presence, which is critical for an NRI sitting in Dubai or San Francisco. The CA in India does not need a power of attorney — only the NRI's PAN and access to the income tax portal credentials. The two forms together form the legal release that the AD bank presents to RBI if any post-facto query arises, so the NRI should retain copies for the statutory period of 7 years.

7. How the AD Bank Actually Executes the Remittance

Only an Authorised Dealer (AD) Category I bank can execute an outward remittance for an NRI under the FEMA Non-Debt Instruments Rules. AD-I banks include all major commercial banks — SBI, HDFC, ICICI, Axis, Kotak, Yes Bank, IndusInd, Standard Chartered, HSBC, Citi, DBS, etc. AD Category II entities (full-fledged money changers) cannot execute these remittances. The mechanical sequence inside the bank: the NRI submits a remittance request on the bank's NRI portal or in person; uploads the sale deed, 15CA acknowledgement, 15CB acknowledgement, Form 16A from the buyer, PAN copy, NRO account statement showing the sale credit, and the source-of-funds declaration. The bank's NRI desk verifies, signs off, and routes the transaction to the FX dealing desk, which converts INR to the destination currency at the prevailing card rate (typically the bank's TT-selling rate plus a 25-75 bps margin). The FX conversion happens on the day the bank executes the SWIFT message, not the day of the request, so the rate the NRI receives can vary 1-3% from the day-of-request quote. Some banks allow forward booking or a rate freeze on the day of conversion if the amount exceeds USD 100,000 — worth negotiating for large remittances. The actual outward SWIFT message goes through the bank's correspondent banking network and lands in the NRI's overseas account in 2-5 business days for major currencies (USD, GBP, EUR, AED, SGD) and 5-10 days for less common destinations. For USD remittances above USD 100,000, the destination US bank typically also runs OFAC and BSA/AML screening, which can add 1-3 business days if the name has any close match in the watchlists. Bank charges are typically 0.125-0.25% of the remitted amount as a service fee, plus a flat SWIFT charge of ₹500-1500, plus the FX spread embedded in the conversion rate. For a USD 1 million remittance, expect to lose roughly ₹2-4 lakh in total bank costs (service fee + SWIFT + FX spread). Negotiating the FX spread is the single most impactful cost lever for large repatriations.

8. Common Mistakes That Delay Repatriation

The most expensive mistake is selling under Section 194-IA instead of Section 195. This happens when the buyer is a resident Indian who treats the seller as resident (because the seller has an Aadhaar and a local address) and deducts only 1% TDS instead of the 20-30% required for an NRI seller. The buyer is then personally liable for the shortfall plus interest under Section 201(1A) — and the NRI cannot get a 15CB issued until the correct TDS is deposited. Always disclose your NRI status in writing to the buyer before the sale agreement. The second mistake is selling without obtaining a PAN. Without a PAN, TDS must be deducted at the maximum rate (20% plus highest surcharge plus cess, effectively ~28.5%) under Section 206AA, and the entire 15CA chain is blocked. PAN takes only 2-3 weeks to issue from abroad through Protean (formerly NSDL) or UTIITSL — there is no excuse for selling without one. The third mistake is a mismatch between the buyer-filed Form 26QB (or Form 27Q) and the seller-filed 15CA. The challan-cum-statement on the income tax portal must match the 15CA in: PAN of buyer, PAN of seller, sale consideration, date of agreement, and TDS amount. Even a one-rupee difference rejects the chain and forces a correction request that takes 4-8 weeks. The buyer's CA and seller's CA should reconcile both filings before submission. The fourth mistake is claiming the repatriable bucket when the property was actually acquired through NRO funds. This often arises when the NRI has held the property for 15+ years and does not have clear records of the original payment source. The bank will demand original bank statements from the year of acquisition, and if these are unavailable, will default to the non-repatriable bucket and apply the USD 1M cap. Maintain original purchase-time bank statements for the entire holding period. The fifth mistake is timing the sale poorly relative to the financial year. Closing a ₹10 crore sale on March 28 means you can only repatriate USD 1M in that FY and have to wait 5 days for the next FY to repatriate the next USD 1M. Closing on April 5 the same year gives you a full 12 months to plan the second tranche. For large sales, the closing date should be planned at least 60 days ahead of the FY boundary.

9. Can NRIs Carry Forward LTCG Losses?

Yes, NRIs can carry forward long-term capital losses for up to 8 assessment years under Section 74 of the Income Tax Act, on the same terms as resident Indians. The loss must be reported in the income tax return for the year in which it arose, and it can be set off only against long-term capital gains in subsequent years — not against any other head of income (not salary, not business, not interest, not short-term gains). A practical scenario where this matters: an NRI sells a property in Bangalore in FY 2025-26 at a ₹15 lakh loss after indexation (rare in growing markets but possible in stalled or down-market projects). They then sell another property in Mumbai in FY 2027-28 at a ₹40 lakh LTCG. The carried-forward ₹15 lakh loss reduces the taxable LTCG to ₹25 lakh, and the TDS / 15CB computation reflects that reduced gain. The crucial precondition is that the loss-year return must be filed before the due date specified in Section 139(1) — typically July 31 of the relevant assessment year. A belated return filed under Section 139(4) does not carry forward the loss. For NRIs, this means even in a loss year with zero tax payable, the return must still be filed on time to preserve the c/f benefit. Many NRIs skip the return in a loss year and lose the c/f permanently. Short-term capital losses can also be carried forward for 8 AYs and set off against either STCG or LTCG in subsequent years — STCL is more flexible than LTCL. Either way, the same Section 139(1) on-time filing condition applies. When you actually apply the carried-forward loss in a future year, the 15CB-issuing CA must compute the net taxable gain after the c/f set-off and attach a note in 15CB referencing the prior-year ITR-V acknowledgement that established the loss. Banks will typically pass this through without further query if the CA has documented the chain correctly.

Repatriation Flowchart — 8 Steps from Sale to SWIFT

The sequence below is the standard chain for an NRI selling a property in India and remitting the proceeds to an overseas account. Steps 1-4 happen before the sale agreement; steps 5-8 happen between sale deed registration and the inward credit at the destination bank.

1. 1

   Determine bucket↓

   Repatriable (NRE/FCNR funds, max 2 properties) vs Non-repatriable (NRO funds, USD 1M cap applies)

2. 2

   Compute LTCG / STCG↓

   Indexed cost, improvements with bills, transfer expenses. CA-prepared computation.

3. 3

   Apply Section 54 / 54EC / 54F if applicable↓

   Reinvest in another residential property (54/54F) or in REC/NHAI/PFC/IRFC bonds (54EC, capped ₹50L)

4. 4

   Apply for Section 197 Lower Deduction Certificate↓

   File Form 13 on TRACES, 4-8 weeks. LDC restricts TDS to actual gain rate, avoids refund cycle.

5. 5

   Sign Sale Deed↓

   Buyer must have TAN. Disclose NRI status in writing. Closing date should not straddle the March 31 / April 1 FY boundary for large sales.

6. 6

   Buyer deducts TDS↓

   At LDC rate if obtained, else 20% LTCG / 30% STCG plus surcharge + cess. Deposit via Form 27Q + Challan ITNS 281. Issue Form 16A to NRI.

7. 7

   File Form 15CA + 15CB↓

   CA uploads 15CB first; NRI then files 15CA Part C quoting 15CB acknowledgement number.

8. 8

   AD Bank executes remittance

   NRO → SWIFT to overseas account. Negotiate FX spread for large amounts. 2-5 business days for major currencies.

Statutory References

• FEMA Notification 21/2000-RB dated May 3, 2000 — Acquisition and transfer of immovable property in India
• FEMA Notification 396/2019-RB (Non-Debt Instruments Rules 2019, Schedule III) — operative since October 17, 2019
• RBI A.P. (DIR Series) Circular No. 67 dated April 13, 2016 — USD 1 million per FY remittance facility for NROs
• Section 5, Income Tax Act 1961 — scope of total income for non-residents
• Section 195, Income Tax Act 1961 — TDS on payments to non-residents
• Section 197, Income Tax Act 1961 — Lower Deduction Certificate via Form 13
• Sections 54, 54EC, 54F, Income Tax Act 1961 — capital gains exemptions on residential reinvestment / bonds
• Section 74, Income Tax Act 1961 — carry forward and set-off of capital losses (up to 8 AYs)
• Rule 37BB, Income Tax Rules 1962 — Form 15CA / 15CB filing under Section 195(6)
• Section 13, FEMA 1999 — penalty for contravention (up to 3x amount involved)

Frequently Asked Questions