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Selling Property in India from the UK
An NRI living in the UK can generally sell property in India without travelling to India in every case, subject to the nature of the property, ownership, applicable FEMA and tax requirements, and the procedure followed by the relevant registering authority. A properly executed Power of Attorney may be used where legally permissible.
Common Issues for NRIs Selling Indian Property
- Selling a house, flat, plot or other property in India while living in the UK
- Executing a Power of Attorney for a sale from the UK
- Ownership or title disputes before the sale
- Property still standing in the name of a deceased parent or ancestor
- Multiple legal heirs or co-owners
- Agricultural land and restrictions applicable to NRI transactions
- TDS and income-tax compliance on the sale of property by an NRI
- Repatriation of sale proceeds from India to the UK
Power of Attorney for Sale of Indian Property
A Power of Attorney may allow an authorised person in India to act for the NRI in connection with a property transaction where the law permits.
The document should be prepared according to the proposed transaction and the requirements applicable in India. Depending on how and where it is executed, authentication, stamping and registration requirements may apply.
A Power of Attorney itself does not transfer ownership of immovable property. The actual transfer takes place through the legally required conveyance or sale documentation and registration process.
Tax and TDS on Sale of Property by an NRI
The tax treatment of an NRI selling Indian property depends on factors including the type of property, period of holding, sale consideration, cost and applicable exemptions.
Section 195 of the Income-tax Act, 1961 may require the buyer to deduct tax when making payment to a non-resident where the payment is chargeable to tax in India. The applicable withholding rate should not be assumed solely from the fact that the seller is an NRI; the transaction should be examined under the law applicable on the date of sale.
Where appropriate, an application for determination or deduction of tax at a lower or nil rate may also be considered under the Income-tax Act.
Agricultural and Ancestral Property
Different rules may apply depending on whether the property is residential, commercial, agricultural or otherwise classified under applicable law.
An NRI's ability to sell inherited or ancestral property should therefore be examined from both the title and FEMA perspective. Agricultural land can involve additional restrictions and should not be treated in the same manner as an ordinary residential property.
Where the property is jointly owned or inherited by several legal heirs, the rights of each co-owner or heir should be established before the sale.
Repatriation of Sale Proceeds to the UK
The ability to transfer sale proceeds from India to the UK depends on FEMA, RBI rules, the nature and source of the property, the manner in which it was acquired, applicable tax compliance and the banking requirements involved.
The commonly referred-to USD 1 million facility for NRI/PIO remittances from an NRO account is subject to the conditions and documentation prescribed under the applicable FEMA/RBI framework. It should not be treated as an unconditional entitlement to remit every property-sale receipt.The remittance route should therefore be confirmed with the authorised dealer bank and, where necessary, with appropriate professional advice before the sale proceeds are transferred.
Frequently Asked Questions
Can an NRI in the UK sell Indian property without travelling to India?
In appropriate cases, yes. A properly executed Power of Attorney may enable an authorised person to complete specified steps in India, subject to the requirements of the relevant law and registering authority.
Can I give a Power of Attorney from the UK to sell my Indian property?
Yes, where legally permissible. The manner of execution and the subsequent stamping, adjudication or registration requirements in India depend on the document and the transaction.
Does an NRI have to pay TDS when selling property in India?
TDS obligations can arise when a buyer purchases property from a non-resident. The applicable rate and compliance requirements depend on the transaction and the Income-tax Act provisions in force at the relevant time.
Can an NRI sell inherited or ancestral property in India?
An NRI may be able to sell inherited property, but the title, succession, co-ownership and applicable FEMA restrictions must first be examined. Agricultural property requires particular attention because different restrictions may apply.
Can property-sale proceeds be transferred from India to the UK?
Subject to FEMA, RBI and income-tax requirements, repatriation may be possible through the permitted banking channels. The authorised dealer bank will generally require supporting documents and evidence of compliance.
What should I check before selling Indian property from the UK?
The ownership/title documents, succession documents where applicable, encumbrances, revenue records, co-owner or legal-heir rights, Power of Attorney, tax/TDS position and FEMA requirements should be examined before proceeding with the transaction.
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