Repatriation of sale proceeds by NRI — limits, forms and tax

Repatriation of Sale Proceeds by NRI: Limits, Forms and Tax Implications

For a Non-Resident Indian (NRI) selling an asset or immovable property in India, receiving the sale consideration is only one part of the process. The next important question is: Can the sale proceeds be transferred outside India, and if so, what are the limits, documents, tax requirements and forms involved?

The Reserve Bank of India (RBI) permits NRIs and OCIs/PIOs to repatriate eligible sale proceeds subject to the Foreign Exchange Management Act (FEMA), applicable RBI regulations, banking requirements and payment of taxes in India.

This article explains the key rules governing repatriation of sale proceeds by NRIs, including the USD 1 million limit, property-specific conditions, Forms 15CA/15CB and the tax implications.

What is repatriation of sale proceeds?

Repatriation means transferring money received in India from the sale of an asset to a bank account outside India.

For example, an NRI owns a residential property in India and sells it for ₹2 crore. After completing the applicable tax and documentation requirements, the NRI may be able to transfer the eligible amount to their overseas bank account.

However, the amount that can be remitted depends on how the property was acquired, how the purchase was funded and the applicable FEMA conditions.

What is the general repatriation limit for an NRI?

One of the most important limits is the USD 1 million per financial year facility.

An NRI/PIO can generally remit up to USD 1 million per financial year from:

Balances in an NRO account;

Sale proceeds of eligible assets;

Assets acquired through inheritance or legacy; and

Certain assets acquired out of rupee funds,

subject to applicable conditions and payment of taxes in India.

The RBI has specifically provided that sale proceeds of immovable property purchased by an NRI as a resident or out of rupee funds can be remitted under the USD 1 million facility, without a lock-in period.

Important

The USD 1 million limit is not necessarily a blanket limit on every property sale. Where the property was purchased using eligible foreign exchange/NRE/FCNR(B) funds, a separate property-specific repatriation route may apply.

Repatriation where the property was purchased using foreign exchange

An NRI/OCI can generally repatriate sale proceeds of immovable property in India, other than agricultural land, farm house or plantation property, where the property was acquired in accordance with FEMA requirements.

The amount eligible for repatriation is generally restricted to the amount originally paid for acquisition through permitted foreign-exchange sources, such as:

Foreign exchange received through normal banking channels;

Funds held in an FCNR(B) account; or

Funds held in an NRE account, subject to the applicable conditions.

The RBI also restricts repatriation of sale proceeds of residential properties purchased using such foreign-exchange funds to not more than two residential properties.

Therefore, an NRI should maintain clear records showing the source of funds used for the original purchase.

What if the property was purchased from rupee funds?

Where an NRI purchased an Indian property using rupee funds or while the person was a resident of India, the sale proceeds may generally be credited to an NRO account.

The NRI can then use the USD 1 million per financial year remittance facility, subject to FEMA conditions, documentary evidence and payment of applicable taxes.

There is no lock-in period merely because the property was purchased out of rupee funds.

What happens if the property was inherited?

Inherited property has separate considerations.

An NRI may generally remit eligible proceeds from assets acquired through inheritance or legacy within the USD 1 million annual facility, subject to the prescribed conditions.

The bank may require documents establishing the inheritance, such as:

Will;

Probate, where applicable;

Succession certificate;

Legal-heir documents;

Previous title documents;

Sale deed; and

Other documents establishing ownership.

The authorised dealer bank must be satisfied about the source and legitimacy of the funds.

Is there any restriction on the type of property?

Yes.

The FEMA framework distinguishes between eligible immovable property and certain restricted categories.

The specific repatriation facility for NRI/OCI sale proceeds does not generally cover agricultural land, farm houses and plantation property in the same manner as ordinary residential or commercial property.

Therefore, the nature of the property should be checked before initiating the remittance process.

What documents are generally required?

The exact document checklist differs from bank to bank and depends upon the nature and history of the transaction.

Commonly requested documents include:

PAN card of the NRI;

Passport and proof of NRI status;

Sale deed/agreement;

Purchase deed of the property;

Previous title documents;

Proof of source of funds used for purchase;

Bank statements showing the original payment;

NRO/NRE/FCNR(B) account details;

Capital-gains computation;

Evidence of payment/deduction of applicable tax;

Form 15CA or the applicable replacement form;

Form 15CB, where applicable;

CA certificate/computation, where required;

Undertaking/declaration prescribed by the bank;

In case of inheritance, succession/probate/legal-heir documents; and

Any additional documents requested by the Authorised Dealer bank.

The bank may request additional evidence depending on the transaction.

Form 15CA and Form 15CB – an important 2026 change

There is an important change for remittances made on or after 1 April 2026.

Under the Income-tax Act, 1961, Form 15CA was used to furnish information regarding foreign remittances and Form 15CB was a CA certificate in specified taxable-remittance cases.

For remittances made on or after 1 April 2026, the Income Tax Department states that the Income-tax Act, 2025 and Income-tax Rules, 2026 apply. The corresponding forms are:

Form 145 – corresponding to the earlier Form 15CA; and

Form 146 – corresponding to the earlier Form 15CB.

The underlying compliance requirements, including furnishing remittance information, CA certification where applicable and TDS compliance, substantially continue.

For transactions under the earlier regime

For remittances covered by the Income-tax Act, 1961:

Form 15CA was divided into four parts:

Part A: Taxable remittance up to ₹5 lakh in a financial year;

Part B: Taxable remittance exceeding ₹5 lakh where an Assessing Officer’s order/certificate was obtained;

Part C: Taxable remittance exceeding ₹5 lakh where Form 15CB was obtained; and

Part D: Remittance not chargeable to tax.

The Income Tax Department confirms these classifications in its Form 15CA guidance.

Form 15CB is a CA certificate determining the taxability of the remittance and applicable TDS provisions. Under the earlier framework, it was generally relevant where the taxable remittance exceeded ₹5 lakh in the financial year and the specified conditions for Form 15CB were satisfied.

What is the tax on sale of property by an NRI?

The sale of Indian immovable property by an NRI can result in capital gains tax in India.

The gain is broadly calculated by comparing the sale consideration with the applicable cost of acquisition and eligible transfer-related expenses.

The tax treatment depends on factors including:

Date of acquisition;

Date of sale;

Type of property;

Period of holding;

Cost of acquisition;

Applicable exemptions; and

Whether the property is a long-term or short-term capital asset.

For transfers on or after 23 July 2024, long-term capital gains on immovable property for an NRI are generally subject to the 12.5% rate without indexation, subject to the applicable provisions. The CBDT’s current return-validation rules specifically state that indexation is not available to non-residents and that the 12.5% rate applies to qualifying transfers on or after 23 July 2024.

Other applicable taxes, surcharge and health and education cess may also need to be considered.

TDS on sale of property by an NRI

A buyer purchasing property from an NRI generally has to consider TDS requirements applicable to payments to non-residents.

This is an important distinction from the TDS provisions that apply when a resident sells property.

The buyer should therefore determine:

Whether the seller is a non-resident for income-tax purposes;

The applicable capital-gains tax;

The correct TDS rate;

Whether a lower/nil deduction certificate is available or appropriate; and

The required reporting and deposit procedure.

An incorrect TDS deduction can result in interest, penalties and compliance issues for the buyer.

Does paying tax mean the entire balance can automatically be repatriated?

No.

Income-tax compliance and FEMA repatriation eligibility are separate requirements.

Even after paying the applicable capital-gains tax, the NRI must satisfy the RBI/FEMA conditions applicable to the particular asset and provide the required documents to the Authorised Dealer bank.

The bank will examine the source of funds, acquisition method, property documents, tax compliance and amount proposed to be remitted.

Can an NRI repatriate more than USD 1 million?

The USD 1 million facility is the standard annual route for eligible assets/sale proceeds covered by the applicable FEMA regulations.

A remittance exceeding the permitted limit may require specific RBI permission or may need to be structured under another permitted route, depending on the facts.

Therefore, an NRI proposing to remit a substantial amount should approach the Authorised Dealer bank before completing the sale or transferring the funds.

Practical step-by-step process

A typical repatriation process may look like this:

Step 1 – Determine NRI status

Establish that the seller qualifies as a non-resident under the applicable income-tax and FEMA provisions.

Step 2 – Check the property

Confirm whether the property is residential, commercial or another category and whether it is eligible for repatriation.

Step 3 – Establish the source of acquisition funds

Determine whether the property was purchased using:

Foreign inward remittance;

NRE funds;

FCNR(B) funds;

NRO/rupee funds; or

Funds when the person was a resident.

Step 4 – Calculate capital gains

Compute the taxable capital gain and determine the applicable tax.

Step 5 – Complete TDS compliance

Ensure that the purchaser has correctly deducted and deposited applicable TDS.

Step 6 – Prepare remittance forms

For transactions under the earlier Income-tax Act framework, Forms 15CA/15CB may apply. For remittances on or after 1 April 2026, the corresponding forms under the new regime are Form 145 and Form 146, subject to the applicable conditions.

Step 7 – Submit documents to the bank

Provide the Authorised Dealer bank with the sale documents, tax documents, bank statements, CA certificate and other required paperwork.

Step 8 – Remit the eligible amount

Once the bank is satisfied with FEMA and tax compliance, the eligible amount can be remitted to the NRI’s overseas bank account.

Common mistakes NRIs should avoid

Mistake 1: Assuming every property sale is automatically repatriable

The source of acquisition and FEMA status of the property matter.

Mistake 2: Treating the USD 1 million limit as a universal property-sale ceiling

Different repatriation routes can apply depending on how the property was acquired.

Mistake 3: Ignoring TDS

Sale of property by an NRI has different TDS considerations from a resident seller.

Mistake 4: Filing the wrong remittance form

The forms applicable from 1 April 2026 have changed. For current remittances, the new Form 145/146 framework needs to be considered.

Mistake 5: Not maintaining purchase records

Bank statements and evidence of the original source of funds can be critical when establishing repatriation eligibility.

Mistake 6: Waiting until after the sale to check FEMA requirements

It is advisable to discuss the proposed transaction with the Authorised Dealer bank and tax professional before the sale proceeds are received.

Conclusion

Repatriation of sale proceeds by an NRI involves two separate compliance layers – FEMA/RBI rules and Indian income-tax requirements.

The commonly used USD 1 million per financial year facility applies to eligible assets and sale proceeds subject to prescribed conditions. Where property was purchased using permitted foreign exchange, a separate repatriation mechanism may apply, including restrictions based on the amount originally funded and, for residential property, the two-property limitation.