12.5% Without Indexation: The Real NRI Property Tax Math Post-Budget 2024.

Budget 2024 restructured the capital gains regime. The change most NRIs don't know about: indexation benefit is gone for long-term capital gains on Indian property sold on or after 23 July 2024.

Under the old rule, LTCG on a property sale was taxed at 20% with indexation — meaning the acquisition cost was adjusted for inflation using the Cost Inflation Index before calculating the taxable gain. On a property held for 15 years, indexation often wiped out 60-80% of the nominal gain.

Under the new rule, LTCG is a flat 12.5% with no indexation. The gain is calculated on the raw difference between sale price and original cost. Simpler, and for most long-held properties, more expensive.

Residents got a limited carve-out: for property acquired before 23 July 2024, they can still choose the old 20%-with-indexation or the new 12.5%-without-indexation, whichever is lower. NRIs did not get this carve-out. It's 12.5% flat.

Let's take a concrete example. A property bought in 2010 for ₹40 lakh, sold in 2026 for ₹1.5 crore.

**Old rule (20% with indexation):**

**New rule (12.5% without indexation):**

In this case, the new rule is slightly cheaper. But take a longer hold — property bought in 2005 for ₹20L, sold for ₹1.5 crore in 2026:

**Old rule:** Indexed cost ≈ ₹55L, gain ₹95L, tax 20% = ₹19 lakh

**New rule:** Gain ₹1.3 crore, tax 12.5% = ₹16.25 lakh

Still cheaper under the new rule for very old properties. But for mid-held properties (5-10 years), the math flips. A property bought in 2018 for ₹80L and sold for ₹1.2 crore:

**Old rule:** Indexed cost ≈ ₹1.1 crore, gain ₹10L, tax 20% = ₹2 lakh

**New rule:** Gain ₹40L, tax 12.5% = ₹5 lakh

That's a 2.5× increase. The middle of the holding curve is where this hurts NRIs the most.

Here's the part that crushes NRI property sales. Section 195 of the Income-tax Act requires the buyer of an NRI's property to deduct TDS at the rate applicable to the capital gain, before paying the sale consideration.

In practice, buyers and their CAs play it safe. They deduct TDS on the full sale price, not the gain. At 12.5% plus surcharge and cess, on a ₹1.5 crore sale that's almost ₹20 lakh withheld. The NRI gets the remaining ₹1.3 crore.

Then the NRI files an ITR, calculates the actual tax on the actual gain (maybe ₹8-10 lakh), and claims the refund. That refund takes 6-12 months to process. In the meantime, ₹10 lakh of the NRI's money is sitting with the Income Tax Department.

**The fix: Form 13 under Section 197.** Before the sale closes, you apply to the Assessing Officer for a lower TDS certificate. The AO computes the actual expected tax (on the actual gain) and issues a certificate authorizing the buyer to deduct TDS at that specific rate or amount — not the full 12.5% on the full sale price.

On a ₹1.5 crore sale with an actual gain of ₹40L, the TDS drops from ₹20 lakh to around ₹5 lakh. You close the sale with ₹1.45 crore in hand instead of ₹1.30 crore. That ₹15 lakh difference is the real value of Form 13.

**Apply for Form 13 before the sale closes.** The AO takes 4-8 weeks to issue a lower-TDS certificate. Start at least 2 months before the expected closure. Our tax representation team handles the entire Form 13 filing and AO follow-up — no flying back to India required.

**Get your calculations right.** Cost of acquisition includes stamp duty, registration, brokerage on purchase, and any capital improvements. If you did renovations, have the invoices ready. If you inherited the property, the date and cost of acquisition are the previous owner's — not yours.

**Plan for repatriation.** After the sale, you'll want to move the funds out of India. That means 15CA/15CB compliance. A CA-signed 15CB is required for most remittances above specified thresholds. Your buyer's RTGS release and your repatriation need to sync with the CA certification timeline.

**DTAA still applies.** The source-country tax is India. Your country of residence may also tax the capital gain (US, UK, Canada, Australia, Germany do). The DTAA lets you claim Foreign Tax Credit in your home country for the Indian tax paid. Your ITR and your home-country filing need to line up, which is where a cross-border-aware CA earns their fee.