Selling property in Kerala from abroad is one of the most common legal requirements NRIs face — and one of the most procedurally complex. It involves Indian property law (Registration Act, 1908; Transfer of Property Act, 1882; Kerala Land Reforms Act, 1963), income tax (TDS under Section 393(2) of the Income Tax Act, 2025, formerly Section 393(2) of the Income Tax Act, 2025 (formerly Section 393(2) of the Income Tax Act, 2025 (formerly Section 195 of the Income Tax Act, 1961), 1961)), foreign exchange law (FEMA, 1999 and RBI regulations), and the procedural requirements of the Kerala Registration Department. Each of these frameworks must be satisfied correctly. A failure in any one — an incorrectly executed PoA, unpaid TDS, an undisclosed encumbrance, or a wrong repatriation procedure — can delay the transaction significantly or expose the NRI seller to tax liability and penalties.
Steps for NRI Property Sale in Kerala
- Step 1: Verify title — encumbrance certificate, original title documents
- Step 2: Execute Power of Attorney from abroad — consulate/apostille/notarisation
- Step 3: Register or adjudicate PoA in Kerala
- Step 4: Buyer's TDS — under Section 393(2) of the Income Tax Act, 2025 at 12.5% plus surcharge and cess on long-term capital gains (held more than 24 months), or at applicable slab rates on short-term capital gains (held 24 months or less); buyer obtains TAN, deposits TDS via Challan 281 by the 7th of the month following deduction, files Form 144 (formerly Form 27Q) quarterly, and issues Form 131 (formerly Form 16A) to the NRI seller
- Step 5: Sale deed executed by PoA holder, registered at Sub-Registrar's office
- Step 6: File Form 15CA and 15CB through CA for repatriation
- Step 7: Repatriate sale proceeds from NRO account — up to USD 1 million per year
- Step 8: File Indian income tax return for the year of sale
Title Verification Before Sale
Before any sale transaction proceeds, the NRI seller must verify the title to the property. An Encumbrance Certificate obtained from the Sub-Registrar's office covering the preceding thirty years will reveal all registered transactions — sale deeds, mortgages, charges, leases, gifts and court orders registered against the property. This must be obtained and reviewed by a qualified advocate in Kerala before the sale proceeds. If the property is mortgaged, the mortgage must be discharged before or simultaneously with the sale. Where ancestral property is being sold, the legal heirs of all deceased owners in the title chain must be identified and their shares accounted for — a legal heir who has not executed a release or consented to the sale can challenge it later. The title search also reveals whether the property is subject to any Kerala Land Reforms ceiling restrictions or other regulatory encumbrances.
Power of Attorney — Execution from Abroad
An NRI who cannot visit India must execute a Power of Attorney in favour of a trusted representative — typically a family member or a professional — to conduct the sale on their behalf. The PoA must be a specific PoA (not a general PoA) authorising the holder to execute and register the sale deed for specifically described property at a stated or negotiated consideration. The method of execution depends on the country of residence. In countries that are parties to the Hague Apostille Convention (including the UK, USA, Australia, Germany, France and most European countries), the PoA should be executed before a notary public in that country and then apostilled by the designated authority. In countries not parties to the Apostille Convention (including the UAE and other Gulf countries), the PoA must be executed before the Indian Consulate or Embassy. Once received in India, the PoA must be adjudicated (stamped) at the appropriate stamp duty rate and may need to be registered at the Sub-Registrar's office if it relates to immovable property — this is required under Section 17 of the Registration Act, 1908 for PoAs relating to property transactions in Kerala.
TDS on NRI Property Sale — Section 195
The buyer of property from an NRI seller is obligated under Section 393(2) of the Income Tax Act, 2025 (formerly Section 195 of the Income Tax Act, 1961, which was repealed on 1 April 2026) to deduct TDS before making payment to the NRI. This applies regardless of whether the buyer is a resident Indian or another NRI. The applicable TDS rate depends on the holding period of the property. If the property is a long-term capital asset (held for more than 24 months), TDS is at 12.5% plus applicable surcharge and health and education cess — the maximum effective rate, including the highest applicable surcharge, is 14.95%. If the property is a short-term capital asset (held for 24 months or less), TDS is at the applicable income tax slab rates (up to 30% at the highest slab) plus surcharge and cess. The NRI seller can apply to the Assessing Officer under Section 397(1) of the Income Tax Act, 2025 (formerly Section 197) using Form 128 (formerly Form 13) for a certificate permitting lower or nil deduction of TDS — this is appropriate where the actual capital gains tax liability is lower than the TDS that would otherwise be deducted.
Section 393(2) imposes TDS on the income chargeable to tax — the capital gain itself, not the gross sale consideration. In practice, however, buyers typically deduct on the full sale consideration because the cost of acquisition and improvement is not independently verified by them. If a property is sold for Rs. 1 crore and the NRI purchased it for Rs. 80 lakhs, TDS at 12.5% on the full consideration would be Rs. 12.5 lakhs — whereas the actual capital gains tax on the Rs. 20 lakh gain at 12.5% is only Rs. 2.5 lakhs. A lower deduction certificate (Form 128) brings TDS in line with actual liability and avoids a prolonged refund process. The buyer must deposit TDS via Challan 281 by the 7th of the month following deduction, file a quarterly return in Form 144 (formerly Form 27Q) within the applicable quarterly due date, and issue Form 131 (formerly Form 16A) to the NRI seller within 15 days of the return due date.Capital Gains Tax on NRI Property Sale
The NRI seller must file an Indian income tax return for the financial year in which the property is sold and pay capital gains tax. For long-term capital gains on property held more than 24 months, the applicable rate under the Income Tax Act, 2025 is 12.5% without indexation. The Finance (No. 2) Act, 2024, effective from 23 July 2024, removed the indexation benefit for long-term capital gains on property. For NRI sellers specifically, the grandfathering option — which allows resident sellers of properties acquired before 23 July 2024 to elect between 20% with indexation and 12.5% without — does not extend to NRIs. NRI sellers pay capital gains tax at 12.5% on the gain regardless of when the property was acquired, and indexation of the cost of acquisition is not available. Capital gains exemptions available to NRI sellers: Section 54 — Reinvestment in residential property: Long-term capital gains reinvested in one residential property situated in India within two years after the sale (or one year before) — or in construction of a property within three years — are exempt. The new property must be in India; overseas property does not qualify. Section 54EC — Specified bonds: Long-term capital gains of up to Rs. 50 lakh invested in specified bonds issued by the National Highways Authority of India (NHAI) or Rural Electrification Corporation (REC) within six months of the sale are exempt. The bonds must be held for five years. Section 54F — Sale of non-residential asset: Where the asset sold is not a residential house, the entire net sale consideration (not just the gains) reinvested in one residential property in India qualifies for full exemption — subject to the condition that the NRI does not own more than one other residential property at the time of sale. All three exemptions apply equally to NRI sellers and should be planned before the sale completes. Where an exemption is anticipated, the NRI should apply for a lower deduction certificate under Section 397(1) of the Income Tax Act, 2025 using Form 128 (formerly Form 13) well in advance — typically four to six weeks before registration — to avoid excessive upfront TDS deduction on the full sale consideration followed by a prolonged refund process.
FEMA Repatriation of Sale Proceeds
After the property sale is completed and taxes are paid, the NRI seller may repatriate the sale proceeds from their NRO (Non-Resident Ordinary) account in India to their overseas bank account. Repatriation of up to USD 1 million (or its equivalent in any freely convertible foreign currency) per financial year from the NRO account is permitted under the Foreign Exchange Management (Remittance of Assets) Regulations, 2016. The remittance requires: a certificate from a Chartered Accountant in Form 15CB confirming that applicable taxes have been paid and that the remittance is within the permissible limit; the NRI's self-declaration in Form 15CA filed electronically with the Income Tax Department; and the bank's own compliance checks. Where the property was originally acquired through foreign inward remittances (from an NRE account), documentary evidence of the foreign currency source allows the original investment amount to be repatriated separately, outside the USD 1 million annual limit.
Frequently Asked Questions
Yes. An NRI can sell property in Kerala without visiting India by executing a specific Power of Attorney in favour of a trusted representative — apostilled (in Apostille Convention countries) or consulate-executed (in non-Apostille countries like the UAE). The PoA holder executes and registers the sale deed in India. The entire process — title verification, TDS compliance, registration and repatriation — can be managed remotely with proper legal representation.
Under Section 393(2) of the Income Tax Act, 2025 (formerly Section 195 of the Income Tax Act, 1961), TDS is deducted by the buyer at 12.5% plus applicable surcharge and cess on long-term capital gains (property held more than 24 months) — maximum effective rate 14.95%. For short-term gains (held 24 months or less), TDS is at applicable income tax slab rates (up to 30% at the highest slab) plus surcharge and cess. In the absence of a lower deduction certificate, buyers typically deduct on the full sale consideration. The NRI seller may apply for a lower deduction certificate under Section 397(1) of the Income Tax Act, 2025 (formerly Section 197) using Form 128 (formerly Form 13) where actual tax liability — particularly after Section 54, 54EC, or 54F exemptions — is lower than standard TDS would produce.
Yes, subject to FEMA compliance. Repatriation of up to USD 1 million per financial year from the NRO account is permitted after paying applicable taxes and obtaining Form 15CB (CA certificate) and filing Form 15CA. Where the property was purchased from foreign remittances, the original investment amount may be repatriated separately beyond the USD 1 million limit, with documentary proof of the foreign currency source.
NRI sellers can claim: Section 54 exemption by reinvesting long-term capital gains in one residential property in India within two years of sale (or three years if constructing) — the property must be in India; Section 54EC exemption by investing long-term capital gains in NHAI or REC bonds within six months of sale, up to Rs. 50 lakh per financial year, held for five years; and Section 54F exemption where the asset sold is not a residential house — the full net sale consideration reinvested in one residential property in India qualifies for exemption, subject to the NRI not owning more than one other residential property at the time of sale. All three exemptions apply to NRI sellers and should be planned before the sale completes, with a lower deduction certificate under Section 397(1) of the Income Tax Act, 2025 applied for in advance to prevent excess TDS deduction on the full sale consideration.