Selling Property in Kerala as an NRI
An NRI can sell Kerala property without being physically present — through a properly executed Power of Attorney, correct deduction of tax at source under the Income-tax Act, 2025, and FEMA-compliant repatriation of proceeds. The tax provisions governing this transaction were renumbered on 1 April 2026 when the Income-tax Act, 1961 was replaced.
Sale of Kerala property by an NRI or OCI holder engages two frameworks at once: Indian property law and FEMA, 1999. The property must have been acquired in accordance with FEMA. Sale proceeds must be credited to an NRO account, from which repatriation abroad is permitted up to USD 1 million per financial year.
The buyer must deduct TDS under Section 393(2) of the Income-tax Act, 2025 at 12.5% on long-term capital gains where the property has been held for more than 24 months, plus surcharge and cess — a maximum effective rate of 14.95%. Short-term gains are deducted at applicable slab rates. A lower deduction certificate under Section 395(1) in Form No. 128 brings the deduction down to actual liability.
Repatriation reporting has changed materially: Form No. 145 and Form No. 146 replace the former Forms 15CA and 15CB, under Rule 220 of the Income-tax Rules, 2026 and Section 397(3)(d) of the 2025 Act, effective 1 April 2026.
Renumbering Under the Income-tax Act, 2025
The Income-tax Act, 1961 was repealed and replaced by the Income-tax Act, 2025, in force from 1 April 2026. Every provision governing an NRI property sale was renumbered. The mapping below is the operative one for this transaction.
| Subject | Income-tax Act, 2025 In force from 1 April 2026 | Income-tax Act, 1961 Periods before 1 April 2026 |
|---|---|---|
| Deduction of tax on payment to a non-resident | Section 393(2) | Section 195 |
| Certificate for lower or nil deduction | Section 395(1) | Section 197 |
| Application for that certificate | Form No. 128 | Form 13 |
| Quarterly TDS return, non-resident payee | Form No. 144 | Form 27Q |
| TDS certificate issued to the seller | Form No. 131 | Form 16A |
| Remitter's declaration on foreign remittance | Form No. 145 | Form 15CA |
| Chartered Accountant's certificate | Form No. 146 | Form 15CB |
Form 16B does not apply to a non-resident seller. That certificate belongs to the resident-to-resident route. Where the seller is an NRI, the certificate is Form No. 131, formerly Form 16A.
Step-by-Step Process
Execute a Special Power of Attorney abroad
Draft a Special PoA limited to the specific property sale. Sign before a notary and obtain an apostille (USA, UK, Australia, Canada and other Hague Convention states) or attestation through the Indian Embassy (UAE and other non-Apostille states). After receipt in Kerala the PoA is adjudicated for stamp duty and registered at the Sub-Registrar office. The PoA holder then acts as your authorised representative for every step below.
Title verification and due diligence
Conduct a full title search — encumbrance certificate covering a minimum of thirty years, original title documents, patta and survey records — before the buyer is finalised. Where the property is ancestral, the legal heirs of every deceased owner in the chain must be identified and their shares accounted for.
Sale agreement
Execute a sale agreement setting out price, payment schedule and completion date. A token advance is received at this stage. The agreement is stamped and signed by the PoA holder on your behalf.
Lower deduction certificate — Section 395(1)
Where actual tax liability is lower than the deduction the buyer would otherwise make, apply to the Assessing Officer under Section 395(1) of the Income-tax Act, 2025 in Form No. 128 through the TRACES portal. Applications take four to six weeks in practice and should be filed well before registration.
TDS by the buyer — Section 393(2)
The buyer deducts TDS before payment: 12.5% plus surcharge and cess on long-term capital gains, or applicable slab rates on short-term gains. The buyer obtains a TAN, deposits the tax via Challan 281 by the 7th of the month following deduction, files the quarterly return in Form No. 144, and issues Form No. 131 to the seller within fifteen days of the quarterly return due date.
Sale deed registration
The final sale deed is executed at the Sub-Registrar office by the PoA holder. Stamp duty and registration charges are paid, possession passes and title transfers.
Repatriation from the NRO account
Proceeds are credited to the NRO account. File Form No. 145 and, where required, obtain Form No. 146 from a Chartered Accountant. On completion of FEMA formalities, up to USD 1 million per financial year may be remitted to your overseas account.
Rate, Indexation and Exemptions
Long-term capital gains on property held for more than 24 months are charged at 12.5% without indexation. The Finance (No. 2) Act, 2024, with effect from 23 July 2024, removed the indexation benefit on property.
Indexation is not available to a non-resident seller. The grandfathering election — which allows resident individuals and Hindu undivided families holding property acquired before 23 July 2024 to choose between 20% with indexation and 12.5% without — does not extend to non-residents. An NRI seller is charged at 12.5% on the gain regardless of when the property was acquired.
Reinvestment reliefs remain available. Section 54 exempts long-term gains reinvested in one residential property in India within two years after the sale, or one year before, or constructed within three years; the property must be in India. Section 54EC exempts gains up to ₹50 lakh invested in specified NHAI or REC bonds within six months, held for five years. Section 54F applies where the asset sold is not a residential house, exempting the whole net consideration reinvested in one Indian residential property, subject to the seller not owning more than one other residential house.
Section numbering of the reinvestment reliefs is not stated here as renumbered. Sections 54, 54EC and 54F are given above under Income-tax Act, 1961 numbering pending verification of their 2025 Act equivalents against the Bare Act.
Buyer's Registration Requirement and the October 2026 Change
A buyer purchasing from an NRI is currently required to obtain a Tax Deduction and Collection Account Number before depositing TDS, unlike a resident-to-resident purchase.
With effect from 1 October 2026, that requirement is removed for a resident individual or Hindu undivided family deducting tax on consideration for the transfer of immovable property — Section 397(1)(c)(iii) of the Income-tax Act, 2025, as substituted by Act No. 4 of 2026. Companies and firms continue to require a TAN. Until 30 September 2026 a TAN remains required for all buyers in an NRI property transaction.
The procedural mechanism for PAN-based deposit has been announced but is not yet prescribed in the Rules. Buyers should confirm the position with their Chartered Accountant before relying on it.
NRI Property Sale in Kerala — Legal Assistance
The office handles NRI property sales end to end — PoA drafting and apostille guidance, title verification, lower deduction certificate applications, sale deed registration and FEMA repatriation — entirely by remote instruction. Response within one working day, across all time zones.
Frequently Asked Questions
Can an NRI sell property in Kerala without coming to India?
Yes. The entire process — from sale agreement through registration and repatriation — can be completed through a Special Power of Attorney holder in Kerala. The PoA must be properly apostilled abroad, or executed before the Indian consulate in a non-Apostille country, and then adjudicated and registered at the Sub-Registrar office. The NRI communicates with the office by email and video call throughout.
How much TDS does the buyer deduct?
Under Section 393(2) of the Income-tax Act, 2025 (corresponding to Section 195 of the repealed Income-tax Act, 1961 for periods before 1 April 2026), TDS is deducted at 12.5% plus applicable surcharge and cess on long-term capital gains where the property has been held for more than 24 months — a maximum effective rate of 14.95%. For short-term gains, TDS is at applicable income tax slab rates, up to 30% at the highest slab, plus surcharge and cess. Section 393(2) charges TDS on the income chargeable to tax — the capital gain — but buyers typically deduct on the full sale consideration where no lower deduction certificate has been obtained.
How does an NRI reduce TDS to the actual tax liability?
By applying to the Assessing Officer under Section 395(1) of the Income-tax Act, 2025 (formerly Section 197) in Form No. 128 (formerly Form 13) for a lower or nil deduction certificate, filed through the TRACES portal before the sale completes. The buyer then deducts at the certified rate rather than on the gross consideration, which avoids a large upfront deduction followed by a prolonged refund claim.
How are the sale proceeds repatriated?
Net proceeds are credited to the NRI's NRO account after tax payment. Repatriation requires Form No. 145 (the remitter's declaration) and, where the taxable remittance exceeds ₹5 lakh in the tax year and no Assessing Officer certificate has been obtained, Form No. 146 (the Chartered Accountant's certificate) — both under Rule 220 of the Income-tax Rules, 2026 and Section 397(3)(d) of the Income-tax Act, 2025. These replace the former Forms 15CA and 15CB effective 1 April 2026. The FEMA annual limit from NRO accounts is USD 1 million per financial year.
Can an NRI sell agricultural land in Kerala?
An NRI holding Indian citizenship can sell agricultural land only to an Indian citizen resident in India — not to another NRI or OCI card holder. OCI card holders are prohibited from purchasing agricultural land under FEMA. Both FEMA and the Kerala Land Reforms Act, 1963 must be checked before proceeding.