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Selling Property in India from the USA
An NRI living in the USA can, in appropriate cases, sell property in India without travelling to India. A properly executed Power of Attorney may allow an authorised person in India to undertake specified steps in the transaction, subject to the applicable law and requirements of the registering authority.
The process can involve title verification, succession issues, Power of Attorney requirements, sale documentation, registration, tax compliance and FEMA requirements concerning the sale proceeds.
Common Issues for NRIs Selling Property in India
- Selling a house, flat, plot or other property while living in the USA
- Executing a Power of Attorney for an Indian property sale
- Disputed ownership or title issues
- Property still recorded 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
- Repatriation of sale proceeds from India to the USA
Power of Attorney for an NRI Property Sale
An NRI may execute a Power of Attorney authorising a person in India to undertake specified acts connected with a property transaction where legally permissible.
The document should clearly identify the property and the authority being granted. Depending on the manner of execution and the transaction, authentication, stamping, adjudication and registration requirements may apply in India.
A Power of Attorney does not itself transfer ownership of immovable property. The transfer must be completed through the legally required conveyance and registration process.
Tax and TDS on Sale of Property by an NRI
The tax consequences of selling Indian property depend on factors including the type of property, period of holding, acquisition cost, sale consideration and applicable exemptions.
Where the seller is a non-resident, Section 195 of the Income-tax Act, 1961 may require the buyer to deduct tax from a payment that is chargeable to tax in India.
The applicable withholding should not be assumed to be a fixed percentage merely because the seller is an NRI. In an appropriate case, an application for determination or deduction at a lower or nil rate may also be considered under the Income-tax Act.
Ancestral and Agricultural Property
Ancestral or inherited property requires examination of the succession and ownership position before a sale is undertaken. Where there are several co-owners or legal heirs, their respective rights must be established.
Agricultural land also requires separate consideration because restrictions applicable to NRI transactions can differ from those applicable to residential or commercial property. State-specific land laws may also apply.
Repatriation of Sale Proceeds to the USA
Whether sale proceeds can be transferred from India to the USA depends on the applicable FEMA and RBI framework, the manner in which the property was acquired, tax compliance and the requirements of the authorised dealer bank.
The commonly referred-to USD 1 million remittance facility from an NRO account is subject to applicable conditions and documentation. It should not be treated as an unconditional right to transfer every property-sale receipt.The proposed remittance should therefore be checked with the authorised dealer bank before the transaction is completed.
Frequently Asked Questions for NRIs in the USA
Can an NRI in the USA sell property in India without travelling to India?
In appropriate cases, yes. A properly executed Power of Attorney may enable an authorised person to undertake specified steps in India, subject to the applicable law and requirements of the registering authority.
Can I execute a Power of Attorney in the USA for selling Indian property?
Yes, where legally permissible. The execution and subsequent stamping, adjudication or registration requirements in India depend on the document, transaction and applicable law.
Does an NRI property sale attract TDS?
TDS obligations may arise when a buyer makes payment to a non-resident seller for property in India. The applicable provisions and rate should be determined from the transaction and tax law applicable at the relevant time.
Can an NRI sell inherited property in India from the USA?
An NRI may be able to sell inherited property, subject to the title, succession, co-ownership and applicable FEMA requirements. The position should be examined before entering into the transaction.
Can an NRI sell agricultural land in India?
The answer depends on the manner in which the agricultural land was acquired, the applicable FEMA provisions and the state laws governing the land. Inherited agricultural property and property purchased by an NRI should not automatically be treated in the same manner.
Can sale proceeds from Indian property be remitted to the USA?
Repatriation may be possible through permitted banking channels, subject to FEMA/RBI requirements, tax compliance and the documentation required by the authorised dealer bank.
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