Sudhir (name changed) called me from Doha the week his flat in Pune finally sold. He was pleased. Then he saw the number that actually landed in his account and went quiet. The buyer had withheld roughly Rs 21 lakh as TDS. His actual capital gains tax, worked out properly, was closer to Rs 8.5 lakh.
Nothing illegal had happened. The buyer had followed the law exactly. Sudhir simply had not applied for one certificate, before the sale deed was signed, that would have kept the extra Rs 12 lakh in his hands instead of the government’s for the next eighteen months.
That is what an NRI legal challenge actually looks like. Not a courtroom. A form nobody told you about.
⚡ Quick Answer
The four legal pressure points for NRIs holding wealth in India are investment access (PIS, demat conversion, fund eligibility), property sale mechanics, estate and succession, and inheritance. Most of the money lost here is not lost to tax. It is lost to timing and paperwork: TDS deducted on the full sale price instead of the gain, a will that was never written, or a demat account that was never converted after your status changed. Property held over 24 months is now taxed at 12.5% without indexation, and TDS runs at that rate plus surcharge and cess, not the old flat 20%.
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The Four Places Things Actually Go Wrong
Cross-border wealth does not fail dramatically. It fails quietly, in four predictable places: what you are allowed to buy, how property is sold, what happens to it after you die, and what happens when you inherit. Each has its own rulebook, and none of them talk to each other.
Investment Access: The Account That Was Never Converted
The most common FEMA breach I see is not exotic. It is a resident demat account and a resident savings account still running years after the person left India.
When your status changes, so must your accounts. The resident savings account is redesignated as NRO. The resident demat becomes an NRI demat, linked to NRE or NRO funds depending on whether you want repatriability. For buying and selling listed shares on repatriation basis, you need a Portfolio Investment Scheme account with a designated bank branch, which reports your transactions to the RBI and enforces the sectoral ceilings. Investing on non-repatriation basis has been simplified and sits outside the PIS route.
The other constraints are real but rarely explained. You cannot do intraday trading or short selling as an NRI. Delivery only. Several fund houses will not accept investments from NRIs in the US and Canada, because of the compliance burden that FATCA places on them, and the list of who accepts what changes without notice. And a PPF account opened while you were resident can run to its 15-year maturity but cannot be extended in five-year blocks the way a resident’s can.
Selling Property: Where the Real Money Leaks
This is the section most articles get wrong, so here is the current position, carefully.
| Holding period | Tax on gain | TDS the buyer must deduct |
|---|---|---|
| More than 24 months (long term) | 12.5% without indexation, plus surcharge and cess | 12.5% plus surcharge and cess, roughly 13% to 14.95% effective, on the full sale price |
| 24 months or less (short term) | Your slab rate | Slab rate, up to 30% plus surcharge and cess |
Three things follow from that table. First, the old flat 20% figure is gone. Since 23 July 2024, long-term property gains are taxed at 12.5% with no indexation. The choice between 20% with indexation and 12.5% without, which was offered as relief for older purchases, is available to resident individuals and HUFs. It is not available to you as a non-resident. Twenty percent now only appears if the seller has not furnished a PAN.
Second, and this is the expensive part, TDS is deducted on the entire sale consideration, not on your profit. Sell for Rs 1.5 crore and the buyer withholds on Rs 1.5 crore, regardless of what you paid for it in 2011.
Third, the plumbing changed in 2026. The Income-tax Act, 2025 renumbered Section 195 as Section 393(2) for transactions from 1 April 2026 onward, and Budget 2026 removes the buyer’s TAN requirement from 1 October 2026 for individual and HUF buyers, replacing it with a PAN-based challan. The rates and your obligations did not change. The forms did.
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The Certificate That Pays for Itself Ten Times Over
Take a flat bought in 2016 for Rs 90 lakh and sold in 2026 for Rs 1.5 crore. The gain is Rs 60 lakh. Tax on that gain, at 12.5% plus surcharge and cess, works out to roughly Rs 8.6 lakh. But TDS is deducted on the full Rs 1.5 crore, which at an effective 14.3% is about Rs 21.5 lakh. You have handed over nearly Rs 13 lakh more than you owe, and you get it back only after filing a return and waiting out a refund cycle, often 12 to 18 months.
A lower deduction certificate under Section 197, applied for on TRACES using Form 13 before the sale deed is executed, tells the buyer to deduct on your actual gain instead. It takes a few weeks to obtain. It cannot be applied for retrospectively.
Of every NRI property sale I have reviewed after the fact, the single most common regret is not the price. It is Form 13.
On saving the tax itself, two routes remain open to you. Under Section 54, reinvest the gain in one residential property in India, purchased within one year before or two years after the sale, or constructed within three years. Under Section 54EC, park up to Rs 50 lakh of the gain in capital gains bonds within six months of the sale. Note that NHAI stopped issuing these bonds in 2022. The live issuers are REC, PFC, IRFC and HUDCO, currently around 5.25% with a five-year lock-in, and the interest is fully taxable at your slab rate.
One more thing on what you may sell to whom. You can sell a house or commercial property to anyone. Agricultural land, plantation property and farmhouses can only be transferred to a resident Indian citizen.
Holding property, portfolios and family obligations across two countries?
We map the whole picture, both sides of the border, so the paperwork gets done before the deadline rather than after the loss.
Estate Planning: The Document Almost Nobody Has Written
India charges no estate duty or inheritance tax. That fact does more damage than good, because it convinces people there is nothing to plan for. There is. What India does have is a slow, document-hungry succession process, and if you die without a will, your Indian assets are distributed under personal succession law while your family tries to run a probate from another time zone.
If you hold assets in India and abroad, write two wills, one for each jurisdiction, each explicitly limited to the assets in that country so neither revokes the other. Registration of the Indian will is optional but worth doing, because it removes an argument later. Name an executor who is physically able to act in India.
Trusts are a genuine option for larger or more complicated estates, particularly where beneficiaries are minors, where property is likely to be contested, or where you want continuity without probate. A revocable trust keeps control with you during your lifetime. An irrevocable trust gives up that control in exchange for stronger asset protection. Contrary to what is often written, an NRI is not barred from being a trustee of an Indian trust, but a trust with non-resident trustees or beneficiaries brings FEMA considerations into play, and that is a structure to build with a specialist rather than a template.
Check – How NRIs can protect land from illegal possession
Inheriting Property in India
You may inherit residential, commercial and agricultural property, plantations and farmhouses in India, including categories you are not permitted to purchase. There is no inheritance tax on receiving it.
What follows the inheritance is where people stall. Get the mutation done in the revenue or municipal records, obtain the succession or legal heir certificate, and update the property tax records. Inherited agricultural land, remember, can only be sold on to a resident Indian citizen. Property left half-registered in a deceased parent’s name for a decade is how encroachment cases begin.
Why Capable People Leave All of This Undone
Sudhir is a project director. He manages contracts worth far more than his flat. So why did the Form 13 never get filed?
Ambiguity aversion is the reason, and it is one of the best-documented findings in behavioural economics. Given a choice between a known risk and an unknown one, people avoid the unknown even when it is objectively the better bet. The Indian legal and tax system, viewed from Doha or Dubai, feels unknowable. So the will gets postponed. The demat conversion waits. The certificate is left for “when I am next in India”. Each delay feels like caution. Every one of them is a decision to accept the worse outcome by default.
In twenty five years I have watched this cost families far more than any market fall. Markets recover. A missed filing window does not.
Frequently Asked Questions
Is TDS on my property sale really deducted on the full price?
Yes, unless you obtain a lower deduction certificate under Section 197 before the sale deed is executed. Without it, the buyer deducts on the entire consideration and you recover the excess through a refund.
Is the LTCG rate on property still 20% for NRIs?
No. For transfers on or after 23 July 2024, long-term property gains are taxed at 12.5% without indexation. The 20%-with-indexation alternative was extended to resident individuals and HUFs, not to non-residents.
Do I need a PIS account to invest in Indian shares?
For purchases on a repatriation basis through the secondary market, yes. Non-repatriable investment has been simplified and sits outside the PIS route. Your bank will confirm what your specific mandate requires.
Can I still buy NHAI capital gains bonds?
No. NHAI stopped issuing 54EC bonds in 2022. REC, PFC, IRFC and HUDCO are the current issuers, with a Rs 50 lakh cap and a five-year lock-in.
Should I write one will or two?
Two, if you hold meaningful assets in more than one country. Each should be limited by its own wording to that country’s assets, so neither accidentally revokes the other.
Do I pay inheritance tax on property I inherit in India?
No. India has no estate duty. Tax only arises later, when you sell, on the capital gain calculated from the original owner’s cost and holding period.
Planning to sell, inherit or restructure Indian assets this year?
Most of these decisions have a window, and the window closes quietly. Let us look at yours before it does.
The distance between you and your Indian assets is not measured in kilometres. It is measured in unfiled forms.
Complexity does not punish the uninformed. It punishes the postponed.
💬 Your Turn
Which of these have you been putting off, the will, the account conversion, or the property paperwork? Tell us what has actually been stopping you.
