Owning property in India while living abroad is common for Overseas Citizens of India (OCIs). Whether you inherited a family home, invested years ago, or purchased property before acquiring foreign citizenship, there may come a time when you decide to sell.
This guide explains legal rules, RBI and FEMA guidelines, tax implications, repatriation procedures, and practical tips for a smooth sale process — along with a real-life case study.
1. Who Qualifies as an OCI?
An Overseas Citizen of India (OCI) is a foreign national of Indian origin who holds an OCI Card issued by the Government of India. You may be eligible if:
- You were eligible to become a citizen of India on January 26, 1950.
- You were a citizen of India after January 26, 1950.
- You are a child, grandchild, or great-grandchild of such a citizen.
Note: An OCI is not the same as an NRI — while NRIs hold an Indian passport, OCIs are foreign passport holders with lifelong visa benefits in India.
2. Legal Rules, RBI Guidelines & FEMA Compliance
The Reserve Bank of India (RBI) and Foreign Exchange Management Act (FEMA) lay down the framework for property transactions by OCIs.
- OCIs can freely sell:
✅ Residential property
✅ Commercial property - OCIs cannot sell agricultural land, plantation property, or farmhouses to another NRI or OCI. Such properties can only be sold to a resident Indian citizen.
- Sale must comply with FEMA Section 6(5), ensuring the property was acquired in accordance with Indian laws.
3. Types of Properties an OCI Can Sell
| Property Type | Can Sell to NRI/OCI? | Can Sell to Resident Indian? |
|---|---|---|
| Residential | Yes | Yes |
| Commercial | Yes | Yes |
| Agricultural Land / Plantation / Farmhouse | ❌ No | ✅ Yes |
4. Tax Implications for OCIs Selling Property
When selling property in India, OCIs are subject to the same tax rules as resident Indians.
Capital Gains Tax
- Short-Term: Property held for less than 24 months — gains taxed at the applicable slab rate.
- Long-Term: Property held for more than 24 months — gains taxed at 20% with indexation benefits.
TDS (Tax Deducted at Source)
- Buyer must deduct TDS at 20% for long-term gains or 30% for short-term gains (plus surcharge and cess).
- TDS is deducted on the entire sale consideration, not just the profit.
Claiming Refund
If TDS deducted is more than your actual tax liability:
- File an Income Tax Return (ITR) in India.
- Claim a refund by providing the buyer’s Form 16A as proof.
5. Repatriation Rules for Sale Proceeds
Under RBI’s Liberalised Remittance Scheme (LRS) and FEMA norms:
- OCIs can repatriate up to USD 1 million per financial year from the sale proceeds of property in India.
- Funds must be routed through your NRO account.
- Proof of sale, tax clearance, and bank forms (Form 15CA & 15CB) are mandatory.
6. Common Challenges OCIs Face & Solutions
| Challenge | Solution |
|---|---|
| Missing title documents | Obtain certified copies from the sub-registrar’s office. |
| No PAN card | Apply online through NSDL/UTIITSL before initiating sale. |
| High TDS reducing buyer interest | Apply for a lower TDS certificate from the Income Tax Department. |
| Being abroad during the process | Appoint a Power of Attorney (PoA) in India to sign documents. |
| Legal heir disputes in inherited property | Get a succession certificate or legal heir certificate. |
7. Real-Life Case Study: Mr. Arjun’s Sale Story
Background:
Arjun, an OCI living in Australia, inherited a 2BHK flat in Pune. He wanted to sell but faced hurdles with paperwork and TDS deductions.
Steps Taken with Kiaan Properties:
- Verified ownership documents and updated municipal records.
- Applied for PAN card and secured a lower TDS certificate.
- Found a genuine buyer through targeted marketing.
- Facilitated sale deed registration via Arjun’s PoA holder.
- Coordinated with his bank for repatriating funds to Australia.
Result:
Sale completed in 45 days, with tax savings of over ₹3.5 lakhs.
8. Step-by-Step Checklist for OCIs Selling Property
- Verify property documents – title deed, tax receipts, encumbrance certificate.
- Apply for a PAN card if not already available.
- Assess tax liability – consider applying for lower TDS certificate.
- Appoint a PoA holder if selling from abroad.
- Find a buyer and negotiate terms.
- Ensure TDS deduction and collect Form 16A from buyer.
- Register the sale deed with the sub-registrar.
- Pay capital gains tax if applicable.
- Apply for repatriation of funds through NRO account.
Conclusion: Sell with Confidence
Selling property in India as an OCI is entirely possible — but it requires careful handling of legal, tax, and banking rules. Mistakes can lead to delays, tax losses, or compliance issues.
At Kiaan Properties, we specialize in helping OCIs and NRIs sell their Indian properties seamlessly — from finding verified buyers to ensuring legal and tax compliance, and assisting with repatriation.
📞 Contact Kiaan Properties today and turn your property sale into a hassle-free, profitable experience.
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