When a US resident sells Indian property, the buyer must deduct tax at non-resident rates, by default on the full sale price. A lower deduction certificate from the Indian tax office limits the deduction to the tax actually due on your gain. The Indian tax is then generally creditable against US tax on the same gain under the India-US treaty.
- Document route
- Notary + state apostille, or consulate
- Time difference
- 9.5 to 13.5 hours behind IST
- Handled in India at
- Income-tax department and your bank
- Travel to India
- None
How it works from the USA
We compute the gain under Indian rules, using the purchase cost or, for older or inherited property, the value on 1 April 2001, and apply online for the certificate before the sale deed. The certificate names the buyer and the amount to deduct. Without it, a buyer paying a non-resident typically withholds well over a tenth of the whole price.
After the sale we file your Indian return and give your CPA a reconciliation: sale price, Indian cost basis, tax deducted and paid, and exchange rates. US basis rules differ, for example inherited property generally takes a stepped-up basis at date of death, so the US gain may be smaller than the Indian one. Planning both computations together avoids overpaying in either country.
What is different for NRIs in the USA
- Long-term gains in India: 12.5 per cent without indexation for non-residents.
- Reinvestment relief in India requires a house in India or specified bonds; it does not reduce US tax.
- Each joint owner needs a separate certificate.
Step by step from the USA
Free review call
Calls are held in your evening or early morning, which is the Indian working day. We read your papers on the tax on a property sale first, so the call is about your options and not a repeat of the facts.
Authority from USA
Where a representative must act for you in India on the tax on a property sale, you sign before a US notary and obtain the apostille of your state, or attend the Indian consulate for your state. We draft the document and send signing instructions.
Work in India
In India, we compute the gain, apply for the lower deduction certificate before the agreement and coordinate with the buyer on deduction and deposit of tax. Updates for clients in the USA go by email and WhatsApp with scans of whatever is filed.
Result and handover
At the end you receive the tax certificates, the filed return and the 15CA and 15CB set for your bank. Originals are couriered to your address in the USA if you need them.
The law in full
This page covers what changes when you handle the tax on a property sale from the USA. For the Indian law, the complete document checklist, common mistakes and more questions, read our main page on TDS & Capital Gains on Property Sale. For other matters, see all legal services for NRIs in the USA or the Tax, Banking & FEMA practice area.
Questions from NRIs in the USA
How much TDS will the buyer deduct if I live in the USA?
At the non-resident capital gains rate plus surcharge and cess, on the amount in your lower deduction certificate, or on the full price if you have none.
Can I claim Indian TDS as a credit on my US tax return?
Generally yes, as a foreign tax credit for Indian income tax on the same gain, subject to US limitation rules. Your CPA will need the Indian tax certificates.
When should a US seller apply for the lower deduction certificate?
As soon as the buyer is identified and before the sale deed, allowing three to six weeks for processing.