Non-Resident Indians (NRIs) often face questions about repatriating funds from property sales in India. A commonly asked query is—Can the sale proceeds from a property purchased as a resident Indian be repatriated abroad? The answer is yes, but it comes with specific conditions and regulatory restrictions.
This blog will guide you through the detailed process, eligibility, and compliance requirements for repatriating property sale proceeds as an NRI.
Conditions for Repatriating Property Sale Proceeds
1. Deposit in NRO Account
The first step is to deposit the sale proceeds into your Non-Resident Ordinary (NRO) account. This is mandatory before initiating any repatriation process.
2. Tax Compliance is a Must
Before repatriating funds, you must ensure that all taxes related to the property sale—such as TDS (Tax Deducted at Source) and capital gains tax—have been fully paid.
3. Restriction on Property Type
NRIs are allowed to repatriate the sale proceeds of up to two residential properties only. This limit does not apply to commercial properties, which are treated differently.
4. Holding Period Matters
- If you held the property for 10 years or more, you are eligible to repatriate the sale proceeds immediately.
- If you held the property for less than 10 years, the funds must remain in your NRO account until the 10-year period is completed.
FEMA Regulations & RBI Approval
Your property must have been acquired in compliance with FEMA (Foreign Exchange Management Act) guidelines. In some special cases, prior approval from the Reserve Bank of India (RBI) may be required for repatriation.
Repatriation Limit for NRIs
As per RBI norms, NRIs can repatriate up to USD 1 million per financial year (April–March), which includes:
- Proceeds from property sales
- Balances in NRO accounts
- Assets acquired through inheritance
This repatriation limit is per individual, not per property.
Special Considerations
Agricultural Land, Farmhouse, or Plantation Property
These types of properties are not freely repatriable and are subject to specific RBI permissions. Ensure you consult a professional before selling such properties.
Inherited Property
In case the property was inherited, NRIs can still repatriate the proceeds up to USD 1 million per financial year, with proper documentation.
Avoiding Non-Compliance
Failing to comply with TDS and other tax obligations can result in penalties, delays, or even rejection of the repatriation request. It’s crucial to follow all legal procedures carefully.
Expert Tip: Consult a Financial Advisor
Navigating the legal, tax, and regulatory landscape around repatriating property sale proceeds as an NRI can be complex. It is highly advisable to consult a qualified tax advisor or financial consultant who specializes in NRI regulations.
Final Thoughts
Repatriating the sale proceeds of property purchased while you were a resident Indian is possible and legal—as long as you meet the compliance guidelines. Always plan your sale and repatriation process well in advance to ensure smooth financial transactions without legal hiccups.