Capital Gains Tax for Non-Residents: What You Need to Know

When a non-resident, a person who doesn’t live in India for tax purposes sells property here, they’re subject to capital gains tax, a tax on profit from selling an asset like land or a home. This isn’t optional—it’s enforced by the Indian Income Tax Department. Even if you live abroad, if you bought a house, villa, or plot in India and sold it for more than you paid, you owe tax on that gain. Many assume living overseas means they’re off the hook. That’s not true.

The tax rate depends on how long you held the property. If you owned it for less than two years, it’s treated as a short-term capital gain, a profit from selling an asset held for under two years and taxed at your regular income rate. If you held it longer, it’s a long-term capital gain, a profit from selling an asset held for two years or more, and taxed at 20% with indexation benefits. Indexation adjusts your purchase price for inflation, which can cut your tax bill significantly. But here’s the catch: if you’re a non-resident, you can’t use the main residence exemption that Indian citizens get. No matter how long you lived there, if you’re not a tax resident, you don’t qualify.

There are ways to reduce or delay the tax. Reinvesting the sale proceeds into another property in India within two years can give you a full exemption under Section 54. Or you can invest in specified bonds like NHAI or REC bonds within six months—this lets you defer the tax. But you must follow the rules exactly: the new property or bond must be in your name, and you can’t sell it within three years. If you don’t, the tax comes due with penalties. Many non-residents miss these windows because they assume their bank or agent will handle it. They won’t. You have to act.

And don’t forget TDS. When you sell, the buyer must withhold 20% of the sale price as tax at source. That’s not the final tax—it’s just a deposit. You still need to file an Indian tax return to claim any refund if you paid too much. Without filing, that money stays with the government. It’s not a glitch. It’s the system.

This isn’t about avoiding taxes. It’s about paying the right amount at the right time. Whether you’re selling a family home in Bangalore, a plot in Gurgaon, or a villa near Chennai, the rules apply the same. The posts below break down real cases: how one NRI in Toronto saved ₹8 lakhs by timing his sale, why a couple in Dubai missed their exemption window, and how a U.S.-based investor used bonds to legally delay payment. You’ll find clear, no-fluff advice from people who’ve been through it—not theory, but what actually works.