Can NRI Sell Property to Another NRI?

Consider an NRI who wants to sell a property they own in India. The problem is that the buyer is also an NRI. This brings up a crucial query: Can NRI sell property to another NRI? As per Foreign Exchange Management Act (FEMA) regulations, an NRI (Non-Resident Indian) can sell property in India, but there are restrictions on whom they can sell it to.

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Can NRI sell property to NRI?

The basic rules regarding NRI selling property to another NRI is:

1. An NRI can sell residential or commercial property to another NRI, OCI (Overseas Citizen of India), or a resident Indian. An NRI cannot sell residential or commercial property to a foreign national (except OCI cardholders).

2. An NRI cannot sell agricultural land, farmhouse, or plantation property to another NRI or OCI. Such properties can only be sold or gifted to resident Indians.

3. If the property is held for more than 2 years, Long-Term Capital Gains (LTCG) Tax at 12% without indexation applies.

4. If held for less than 2 years, Short-Term Capital Gains (STCG) Tax at the applicable slab rate applies.

5. The buyer must deduct TDS at 20% for LTCG and 30% for STCG before making the payment to the NRI seller.

NRIs can repatriate up to $1 million per financial year from property sale proceeds after paying taxes. Funds must be deposited in an NRO account before repatriation.

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Cess on NRI Selling Property: Understanding Tax Implications 

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can NRI sell property to another NRI.

Yes, Non-Resident Indians (NRIs) can sell property to another NRI, but there are specific regulations and guidelines they must follow as per the Foreign Exchange Management Act (FEMA) in India.

Can NRI Sell Property to Another NRI?

• NRIs can freely sell residential and commercial properties to another NRI, a person of Indian Origin (PIO), or an Indian citizen. There are no restrictions on the number of residential or commercial properties an NRI can sell.

• NRIs are not allowed to sell agricultural land, plantation property, or a farmhouse to another NRI or PIO. These types of properties can only be sold to Indian citizens residing in India.

• Ensure that all property documents are in order, including the title deed, encumbrance certificate, and tax receipts. The sale agreement must be legally drafted, clearly stating the terms and conditions of the sale.

• NRIs can repatriate the sale proceeds of property sold in India, subject to certain conditions and limits. The amount should not exceed the original investment amount.

• The repatriation is allowed for up to two residential properties. For more than two properties, the proceeds can be credited to an NRO account and can be repatriated up to USD 1 million per financial year.

• Capital gains tax is applicable on the sale of property by NRIs. The rate of tax depends on the holding period of the property. Long-term capital gains (property held for more than 2 years) are taxed at 20%, while short-term capital gains (property held for 2 years or less) are added to the NRI's income and taxed at the applicable income tax slab rates.

• NRIs can claim exemptions under Section 54 (for residential property) and Section 54F (for any property other than residential) of the Income Tax Act if they reinvest the gains in another property or specified instruments.

• If the NRI is not present in India to execute the sale, they can appoint a Power of Attorney (PoA) to carry out the transaction on their behalf. The PoA document must be attested by the Indian consulate in the country of residence. 

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can NRI sell property to another NRI.

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