Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) often own property in India, but transferring these assets—whether through gifting, selling, or inheritance—requires strict compliance with Indian laws. This guide covers all legal aspects, tax implications, and step-by-step processes for hassle-free property transfers.
1. Key Legal Considerations for NRIs Transferring Property
NRIs and PIOs can legally gift, sell, or inherit property in India, but they must follow:
✔ FEMA Regulations (Foreign Exchange Management Act, 1999) – Governs property ownership and repatriation of funds.
✔ Indian Registration Act, 1908 – Mandates registration of property transfers.
✔ Income Tax Act, 1961 – Taxes on capital gains, TDS deductions, and exemptions.
✔ State-Specific Stamp Duty & Registration Laws – Vary by location.
Important Restrictions for NRIs
- ❌ Cannot buy agricultural land (except through inheritance).
- ✔ Can own residential/commercial property without restrictions.
2. Option 1: Gifting Property as an NRI
Legal Process for Gifting
- Prepare a Gift Deed
- Must be on stamp paper (value varies by state).
- Must be signed by donor (NRI) and donee (recipient).
- Should include property details, relationship proof (if gifting to relatives).
- Registration at Sub-Registrar Office
- Mandatory under Section 17 of the Registration Act, 1908.
- Can be done via Power of Attorney (POA) if NRI is abroad.
- Tax Implications
- No income tax if gifted to close relatives (spouse, children, parents).
- Stamp duty applicable (lower for blood relatives in some states).
- Gift to non-relatives may attract clubbing provisions under Income Tax Act.
⚠ Note: Once registered, a gift deed is irrevocable.
3. Option 2: Selling Property as an NRI
Step-by-Step Process for Sale
1. Title Verification
- Check for encumbrances, loans, or legal disputes (via encumbrance certificate).
- Ensure clear title before proceeding.
2. Sale Agreement & Sale Deed
- Must include:
- NRI’s PAN, passport copy, foreign address.
- Buyer’s KYC details.
- Stamp duty & registration charges apply (varies by state).
3. TDS Deduction (Tax Deducted at Source)
- Buyer must deduct TDS before payment:
- 20% TDS (if short-term capital gains – held < 24 months).
- 10% TDS (if long-term gains – held > 24 months).
- Form 27Q must be filed for TDS compliance.
4. Repatriation of Sale Proceeds
- Up to USD 1 million/year allowed under FEMA.
- Requires:
- Form 15CA (self-declaration).
- Form 15CB (CA certification).
- Funds must come from NRO account.
💡 Pro Tip: Apply for a lower TDS certificate (u/s 197 of IT Act) to reduce deduction.
4. Option 3: Power of Attorney (POA) for NRIs
Types of POA for Property Transfers
- General POA (Broad powers – risky, avoid unless necessary).
- Specific POA (Limited to sale/gift/registration – recommended).
How to Execute POA from Abroad?
- Notarize POA in country of residence.
- Attestation at Indian Embassy/Consulate.
- Adjudication in India (at district collector’s office).
- POA holder can then sign documents on NRI’s behalf.
⚠ Best Practice: Use specific POA to limit misuse risks.
5. RERA Protection for NRIs
- ✔ Builders must register projects under RERA.
- ✔ NRIs can file online complaints for delays/fraud.
- ✔ Same legal rights as resident Indians.
Example: Maharashtra RERA Portal
6. Tax & Compliance Tips for NRIs
- Capital Gains Tax applies on property sales.
- Exemptions available (Sec 54/54F) if reinvested in another property.
- Form 15CA/CB required for remittance > ₹5 lakh abroad.
7. Need Legal Assistance?
For expert guidance on NRI property transfers, inheritance, or tax compliance, contact:
B S Makar, Advocate
📞 +91-9878131111 | 🌐 www.makarlaws.com
📍 Specialized in NRI Property, Inheritance & Tax Compliance
Key Resources
🔗 RBI FEMA Guidelines
🔗 NRI Property Sale TDS Rules
🔗 RERA Complaints Portal
Final Thoughts
Managing property in India as an NRI doesn’t have to be complicated. With the right legal steps, you can gift, sell, or inherit property smoothly—without traveling to India.
