Tax Saving Tips on Property Sales for NRIs (Section 54)
Detailed NRI Guide: Navigating Capital Gains, Section 54, and TDS in 2026 🇮🇳💼
For a Non-Resident Indian (NRI), selling property in India in 2026 involves more than just finding a buyer. It requires a deep understanding of Section 54, the indexation benefit for NRI on sale of property, and the new 12.5% LTCG rate introduced in late 2024.
If you are wondering what happens if NRI sells property in India, the most critical factor is the TDS on sale of property by NRI, which is often deducted at a much higher rate than the actual tax due.
1. Section 54 vs. Section 54F: Which One Do You Need? ⚖️🏗️
Understanding the difference between these two sections is the best way to invest small amounts of effort for massive tax savings.
| Feature | Section 54 (Residential to Residential) | Section 54F (Other Asset to Residential) |
| Sale Asset | A Residential House Property | Any Long-Term Asset (Plot, Gold, Shares) |
| Reinvestment | Only the Capital Gain amount | The Total Net Sale Proceeds |
| Exemption | Full (if gains < ₹10 Cr) | Proportionate to the amount invested |
| Key Condition | Holding period of 24 months+ | Must not own >1 other house in India |
| Greater Noida Hub | Ideal for high-end luxury shifts 🏙️ | Perfect for turning land/gold into a 2 BHK 🏠 |
Pro-Tip: Under Section 54, if your LTCG is below ₹2 Crore, you can invest in two residential properties anywhere in India (like Greater Noida 💎) to claim full exemption. This is a once-in-a-lifetime opportunity!
2. Calculating Your Gains: Indexation & 2026 Rates 📊📉
How to calculate long-term capital gain on property for NRI?
As of 2026, the rules for properties held for more than 24 months are:
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Option A: Flat 12.5% tax without indexation (Simplified for newer properties).
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Option B: 20% tax with indexation (Only for properties acquired before July 23, 2024).
Is indexation benefit available on sale of property for NRI? Yes, for legacy properties. Indexation adjusts your purchase price for inflation, which is a simple trick for avoiding capital gains tax by artificially increasing your “cost” and reducing your “profit.”
3. Avoiding the 20% TDS Trap (Section 195) 🛡️⚠️
The biggest headache for NRIs is that the buyer must deduct TDS on sale of property by NRI at 20% (plus surcharge and cess) on the total sale value, not just the profit.
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Example: Selling a property for ₹1 Crore in Greater Noida 🏙️ leads to a TDS of ~₹23 Lakh, even if your actual profit is only ₹10 Lakh!
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How can NRI avoid TDS on property sale? Apply for a Lower Tax Deduction Certificate (Form 13) via the Income Tax portal. 💻
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Timeline: Start this 30–45 days before the sale. Once the AO issues the certificate, the buyer will only deduct tax on your actual gain.
4. Why Reinvest in Greater Noida 💎?
Greater Noida is the top choice for NRIs due to the Noida International Airport and world-class connectivity.
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Circle Rate Check: Before finalizing a deal, verify the Greater Noida Circle Rates 2025 to ensure your reinvestment qualifies for Section 54.
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Property Picks: Many NRIs park their gains in a 2 BHK flat for sale in Greater Noida under 30 Lakh for high rental yields.
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Logistics: Ensure your documents reflect the correct Greater Noida Pin Code for seamless KYC.
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Transport: Reinvesting near the Gaur City 2 Metro nearest station ensures your asset stays liquid. 🚆
Frequently Asked Questions (FAQs) ❓
Q1: Can NRIs claim section 54 exemption?
Absolutely. NRIs are eligible for both Section 54 and 54F, provided the new property is purchased/constructed in India. 🇮🇳
Q2: What is the 36 month rule for capital gains tax?
This is the construction timeline. You have 3 years (36 months) to complete the construction of a new house to claim Section 54/54F benefits.
Q3: How to get 0% long-term capital gains?
By reinvesting 100% of your taxable gains (u/s 54) or 100% of your net proceeds (u/s 54F) into a new residential property in India.
Q4: Can I invest 10,000 rs in real estate?
To save tax on a full property sale, small amounts won’t work. However, for wealth building, you can use a real estate investment app India to start with small fractions.
Q5: What is the 90% rule for capital gains exemption?
This relates to REITs (like PropShare REIT), which must distribute 90% of their income to investors. For physical property sales, the only “percentage” to worry about is reinvesting 100% to save 100% tax.
