Finding 3: NRI TDS & LTCG — Budget 2025-26 Changes for Property Transactions
Oracle Run: oracle-2026-04-23-regulatory
Date Compiled: 2026-04-23
Topic: NRI Real Estate / TDS / Tax
Source Tier: S (Primary — CBDT/Finance Ministry) + A (Mint/ET reporting)
Date Tier: T2 — Budget 2025-26 (effective FY2025-26, i.e., April 1, 2025 onwards)
Summary
Union Budget 2025-26 (presented February 1, 2025, Finance Act assented ~March 2025) introduced key changes affecting NRI property transactions in India, building on the July 2024 Finance Bill amendments.
Key Tax Changes Effective FY2025-26 (Active in 2026)
1. LTCG Rationalization (Introduced July 23, 2024 — confirmed)
- LTCG rate on immovable property reduced from 20% (with indexation) to 12.5% (without indexation)
- This applies to property sold after July 23, 2024
- Exception (Parliament amendment): For property purchased before July 23, 2024, sellers can choose: (a) 12.5% without indexation, OR (b) 20% with indexation — whichever results in lower tax
- For NRI sellers: The same rates apply, but TDS by buyer must be at the applicable LTCG rate
2. TDS Alignment for NRI Property Sales
- Previously: Buyer of NRI property was required to deduct TDS at 20%+ under Section 195 regardless of LTCG rate
- Budget 2025-26 change: TDS rate for NRI property sellers aligned to effective LTCG rate (12.5% for long-term), reducing cash flow blockage for NRI sellers
- Buyers of property from NRI sellers must obtain TAN (Tax Account Number) and deduct accordingly
3. Holding Period for LTCG
- Real estate LTCG holding period remains 2 years (24 months) for property sold after July 23, 2024
- (Reduced from earlier 36 months per Finance Act 2024 change)
4. Form 15CA/15CB Requirements
- NRI remitting sale proceeds abroad still requires:
- Form 15CA: Declaration by remitter
- Form 15CB: CA certificate (if amount > INR 5 lakh)
- Filed on Income Tax e-filing portal
- These requirements unchanged in 2025-26
NRI Double Taxation Avoidance Agreement (DTAA)
- India has DTAAs with UAE, USA, UK, Canada, Singapore, etc.
- NRI sellers can avail DTAA benefits to reduce/eliminate Indian tax on property gains if taxed in country of residence
- Tax Residency Certificate (TRC) required
Quantitative Example for Runwal Context
Scenario: NRI sells a Runwal flat in Mumbai
- Purchase price (2019): INR 1.5 Cr
- Sale price (2026): INR 2.8 Cr
- Capital gain: INR 1.3 Cr
- LTCG (12.5% without indexation): INR 16.25 lakh
- With indexation option (20% of indexed gain ~0.8 Cr): INR 16 lakh
- Net result: Near parity; 12.5% without indexation marginally better for high-appreciation property
Source URLs
- CBDT Tax on Immovable Property: https://incometaxindia.gov.in/Pages/tds-on-immovable-property.aspx
- Finance Bill 2024 (July 2024 amendments): https://www.indiabudget.gov.in/
- ET/Mint coverage of NRI tax changes 2024-25: https://economictimes.indiatimes.com (search: “NRI property TDS 2025”)
Runwal Relevance
- Positive for NRI segment: Reduced TDS friction encourages NRI sellers to transact
- Opportunity: Runwal can market lower effective tax burden to NRI buyers who anticipate future sales
- Consider advising NRI buyers on DTAA benefits — particularly UAE/US NRIs (major Runwal buyer segments)