🌍 How NRIs Can Transfer Funds Overseas
For many Non-Resident Indians (NRIs), repatriating funds from India—especially after selling property—may seem daunting. However, with proper documentation and guidance, the process can be carried out smoothly and compliantly under the Income Tax Act and FEMA (Foreign Exchange Management Act).
Here’s a step-by-step guide to help you understand how the process works:
💸 Step 1: Sell the Property & Tax Deduction at Source (TDS)
Under Section 195 of the Income Tax Act, 1961, a TDS of 12.5% plus surcharge and cess resulting in making the effective rate range between 12.5% to 14.96%, depending on the transaction value and applicable slab.) is applicable on capital gains from sale by an NRI.
If the buyer does not know the exact capital gain, TDS is often applied on the entire sale consideration, which may lead to excess deduction.
🏠 Step 2: Deposit Funds into NRO Account
Deposit the proceeds for example from selling residential or commercial property in India to your Indian NRO bank account. This is a mandatory step before initiating any remittance abroad.
📑 Step 3: Get Certificate from Chartered Accountant
Before sending the funds abroad, NRIs must submit following documents to the bank:
- Form 15CA: Declaration for remittance by the Remitter.
- Form 15CB: Certification from a Chartered Accountant confirming tax compliance
These forms are mandatory under The Indian Income Tax Act and FEMA (Foreign Exchange Management Act) and Rules framed thereunder.
🌍 Step 4: Transfer Funds to Overseas Account
After submitting the forms to your bank, you can transfer the money from your Indian NRO bank account to your overseas account using foreign remittance services, subject to limits (currently up to USD 1 million per financial year, as per RBI guidelines).
📥 Step 5: File Income Tax Returns
After the end of the financial year from the date of sale, you must file your Income Tax Return (ITR) in India reporting the capital gains and other Indian income (if applicable) . This ensures correct calculation of tax liability and compliance with Indian tax laws.
💰 Step 6: Claim Refund (if applicable)
If the TDS deducted is more than your actual liability, you can claim a refund while filing your tax return. Refunds are generally credited to your NRO account by the Income Tax Department after processing.
✅ Summary
- Sell the property in India (ensure TDS is Deducted)
- Deposit proceeds in your NRO account
- Get Form 15CA & 15CB from an Indian CA
- Transfer funds to your overseas account
- File your income tax return
- Claim refund if excess TDS was paid
📌 Final Tip
Working with an experienced Indian Chartered Accountant is crucial for a smooth and compliant transfer process.
iCA Certify has a team of experts with 40+ years of experience helping NRIs with overseas money transfers. Their expertise ensures you stay compliant and avoid delays or errors. If you're an NRI planning to transfer funds overseas after selling property in India, reach out to iCA Certify for fast, reliable, and professional support.