When an NRI decides to sell a property in India for under ₹50 lakh, the excitement of a successful sale can quickly be overshadowed by confusing tax rules and procedural hassles. From determining whether your gain is short-term or long-term to navigating TDS, indexation, and repatriation, every step demands clarity. In this blog post, we’ll break down the entire journey into bite-sized, actionable segments, complete with real numbers, clear tables, and simple explanations. By the end, you’ll have a roadmap that transforms tax complexity into confident decision-making for properties below ₹50 lakh.
Before you calculate taxes, it’s crucial to know where your property sits in the market spectrum. This positioning affects everything from stamp duty costs to negotiation leverage, legal fees, and even buyer expectations.
A clear classification helps you:
Category
Sale Value Range
Typical Examples
Budget
Up to ₹50 lakh
Small 1 BHK in tier-2 cities
Mid-Range
₹50 lakh – ₹1 crore
2–3 BHK flats in growing suburbs
Premium
₹1 crore – ₹5 crore
Villas or high-end apartments in metros
Luxury/High-Value
Above ₹5 crore
Penthouses, luxury villas
Capital gains tax depends on how long you held the property. Held for two years or less? You face Short-Term Capital Gains (STCG). Held for more than two years? You qualify for Long-Term Capital Gains (LTCG) with indexation benefits.
If you sell within two years of purchase, your profit is fully taxable at the slab rate for capital assets.
Key Points
Worked Example
Holding for over two years unlocks LTCG at a flat 20% rate, with indexation shrinking your taxable gain to adjust for inflation.
Key Points
Financial Year
CII
2018–19
280
2023–24
348
Indexed Cost Formula
Indexed Cost=Original Cost×CIISale YearCIIPurchase Year\text{Indexed Cost} = \text{Original Cost} \times \frac{\text{CII}_{\text{Sale Year}}}{\text{CII}_{\text{Purchase Year}}}Indexed Cost=Original Cost×CIIPurchase YearCIISale Year
Worked Example
Hold a property beyond two years and you qualify for Long‑Term Capital Gains (LTCG) at 20% post‑indexation. Indexation applies the Government’s Cost Inflation Index (CII) to your purchase price, shrinking your taxable gain.
Financial Year
CII
2018–19 (Purchase)
280
2023–24 (Sale)
348
Indexed Cost Formula:
Indexed Cost=Original Cost×CIISale YearCIIPurchase Year\text{Indexed Cost} = \text{Original Cost} \times \frac{\text{CII}_{\text{Sale Year}}}{\text{CII}_{\text{Purchase Year}}}
Worked Example:
Key Benefits of Indexation:
Your total tax rate depends on your income slab, surcharge, and cess. Below is a consolidated view:
Component
LTCG (%)
STCG (%)
Base Rate
20
30
Surcharge
– Total income ≤ ₹50 lakh
Nil
Nil
– ₹50 lakh – ₹1 crore
10% of tax
10% of tax
– ₹1 crore – ₹2 crore
15% of tax
15% of tax
– ₹2 crore – ₹5 crore
15% (LTCG) / 25% (STCG)
Same brackets
– Above ₹5 crore
15% (LTCG) / 37% (STCG)
Same brackets
Health & Education Cess
4% on (tax + surcharge)
4% on (tax + surcharge)
Effective Maximum Rate
~23.92%
~37.44%
When you sell as an NRI, the buyer deducts TDS at source under Section 195 before releasing funds. This upfront deduction often exceeds your final liability but is adjustable when you file your return.
TDS Rates
Gain Type
TDS on Sale Value
Surcharge + 4% Cess
STCG
30%
Yes
LTCG
20%
Yes
Lower TDS Certificate (Form 13): You can apply to the Assessing Officer for a certificate to reduce TDS based on estimated tax liability.
Even if you hold property long enough, you can eliminate or reduce LTCG tax by reinvesting under various sections.
Failing to deduct or deposit TDS on time can trigger serious penalties under the Income Tax Act:
a. Penalty under Section 201(1A)
b. Disallowance of Expenses (Section 40(a)(i)/(ia))
c. Penalty for Late Filing of TDS Returns
Including these checks in your process ensures you avoid extra costs and headaches down the line.
Beyond the base rate, high‑income NRIs face surcharge. Cess is flat 4% on the total tax.
Total Income (Incl. Gains)
Surcharge on LTCG
Surcharge on STCG
Up to ₹50 lakh
Nil
Nil
₹50 lakh – ₹1 crore
10%
10%
₹1 crore – ₹2 crore
15%
15%
₹2 crore – ₹5 crore
15% (LTCG) / 25% (STCG)
Same brackets
Above ₹5 crore
15% (LTCG) / 37% (STCG)
Same brackets
Remember: cess of 4% applies on top of tax + surcharge.
After sale proceeds land in your NRO account, follow these steps:
Rahul’s friend, Mr. Rajesh, sold a Pune apartment to illustrate:
Detail
Values
Sale Price
₹48 lakh
Purchase Price (5 years ago)
₹30 lakh
Indexed Cost (CII 1.4×)
₹42 lakh
LTCG
₹6 lakh
Tax on LTCG (20%)
₹1.20 lakh
