Legal Advice on Process of Selling Property Owned by Non-Resident Indian (NRI) in India: NRI Legal Services in Delhi NCR

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“Under the NRI legal services the real estate laws or the property related queries find a special place. There have been cases/events wherein the NRI has entered into a wrong transaction as he/she did not avail a proper online legal consultation from a reputed real estate attorney or lawyer handling property cases and thus leading to a financial loss. There have been numerous cases where the property gets struck in litigation as the sale did not happen properly and the NRI has to suffer the losses. Further, for want of knowledge of the real estate laws of India or the property laws of India there always exists a chance of deficient paperwork and legal documentation.”

There is no restriction on NRI to sell or gift property to residents of India but there are some rules and thing that should be kept in mind while selling property in India owned by NRI. NRIs are not permitted to sell the property owned in India by them to foreigners. In case of selling property to another NRI or person of Indian Origin (PIO), they may need the prior-approval of Reserve Bank of India (RBI). In this article, the process of selling the property in India owned by NRI is discussed.
Types of Properties that can be sell by NRI- In case of residential or commercial property, the NRI can sell it without any prior permission but to Indian resident, citizen or PIO or NRI only. The NRI can sell agricultural land, plantation property of Farm house under general permission a person who is citizen and resident of India only.
NRIs are also restricted to transfer the property (commercial or residential property) by way of mortgage to party abroad. Permission from RBI is needed before it.
Documents required by NRI for selling
• Title deed of the Property
• To show the clearance of any debt on property or litigation, the NRI need to provide No Objection Certificate
• Municipal Corporation’s issued Occupation Certificate
• Sanction certificate
• If the property being sell is part of society, then cooperative share certificate
• If original document is lost then the lawyer certificate
• PAN card
These documents necessarily need to be furnished by the NRI wanting to sell property in India.

Process of Selling Property Owned by NRI in India
The first step is to get all the documents ready and the next step would be to find a suitable buyer and in case the NRI do not have any person helping here in India to find a suitable buyer, the NRI can find a brokerage firm, it can assist the buyer with the whole selling process. It is important to understand the market condition and price trends prevalent at the time of selling property in India. Once, the seller found the buyer, they can enter into the sale deed of the property and to avoid regular visit to India for any issue regarding registration of property, the NRI seller can opt for Power of Attorney (POA). It is not necessary for the NRI seller to delegate all the power to representative. The Seller can merely delegate the power where the representative will represent the seller in the sub-registrar office during the registration of property.
After the sale of property, the NRI should focus on tax implication. The capital gain from the sale of property will be taxed. If a property is sold which is owned by the owner for less than two years, it would be deemed as short-term capital gain and on contrary, if a property which is owned for more than two years, then sale of that property is long term capital gain. We need to differentiate between the both because tax payable on long term capital gain is different from tax payable on short term capital gain. There is 20 % tax implication on Long-term capital gain (LTCG) and short-term capital gains are taxed as according to the individual ’s income slab rate.
In case of long-term capital gain, a Tax deducted at source (TDS) of 20% and in case the property is being sold within 2 years of purchase (shot-term capital gain), a TDS of 30% will be applicable.

Repatriation Issues
There are no restrictions if the money repatriated is less than US $ 1 million per year provided it is for sale of 2 residential properties only but in case it exceeds the same, it is not allowed. Under Foreign Exchange Management Act (FEMA) which regulates the flow of foreign exchange, there are no restriction on repatriation proceeds but RBI put the above-mentioned condition of US $ 1 million.

Therefore, before selling any real estate or property in India the NRI should always obtain a proper legal consultation from the best real estate attorney or a property lawyer and should always endeavour to have complte compliances to the real estate laws as well as the tax laws of India.

The process for sale of property by NRI is same as that of any resident Indian selling property in India. The only difference is tax implications. Exemptions provided in Income Tax Act can be availed by NRI for tax. They are specifically provided for NRIs only.
Authored By: Adv. Anant Sharma & Anjali Swami