Step-by-Step Process
1
Execute a Special Power of Attorney abroad: Draft a Special PoA limited to the specific property sale. Sign before a notary and get it apostilled (USA, UK, Australia, Canada) or attested through the Indian Embassy (UAE). After receipt in Kerala, register at the Sub-Registrar office. The PoA holder then acts as your authorised representative for all steps below.
2
Title verification and due diligence: Conduct a thorough title search — encumbrance certificate (minimum 30 years), original documents, patta, and survey records must be verified before finalising the buyer.
3
Sale agreement: Execute a sale agreement with the buyer setting out the 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.
4
TDS by the buyer — Section 195: The buyer deducts TDS before payment. For long-term capital gains (property held over 2 years), TDS is 20% plus surcharge and cess on the total sale price — not just the gain. Apply for a Lower Deduction Certificate from the Income Tax officer if actual tax liability is lower.
5
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. The buyer takes possession and title transfers.
6
Form 15CA and 15CB: To repatriate the net proceeds, file Form 15CA (online declaration) and obtain Form 15CB (Chartered Accountant certificate confirming tax compliance). Both are submitted to the bank.
7
Repatriation from NRO account: Sale proceeds are credited to your NRO account. After completing FEMA formalities, up to USD 1 million per financial year can be repatriated to your overseas account.
TDS Under Section 195 — Key Points
Section 195 of the Income Tax Act requires the buyer to deduct tax at source from the payment made to an NRI seller. This is the buyer's obligation, but the NRI seller must ensure compliance because failure blocks the sale proceeds.
- Long-term capital gains (property held over 2 years): TDS at 20% + surcharge + cess on total sale consideration
- Short-term capital gains (held 2 years or less): TDS at 30% + surcharge + cess
- TDS is on the total sale price — not just the gain. This is frequently misunderstood.
- Lower Deduction Certificate: apply to the jurisdictional Income Tax officer under Section 197 before the sale completes if actual tax liability is lower
Capital gains exemption: NRIs can claim exemption by reinvesting in another residential property in India under Section 54, or in NHAI/REC bonds under Section 54EC within 6 months of sale. File the income tax return to claim the exemption and refund of excess TDS deducted.
