NRI Tax on Sale of Apartment in Mumbai: Complete Guide for 2026

Selling a Mumbai apartment as an NRI looks straightforward on paper. You find a buyer, agree on a price and transfer the property. What most NRIs discover too late is that a large portion of the sale proceeds can be withheld as TDS before the money ever reaches them. Without proper planning, NRI tax on sale of apartment Mumbai can consume 20 to 30 percent of the total sale value upfront. Here is everything you need to know before you sign.

The tax you pay depends entirely on how long you have held the property. If you sell within 24 months of purchase, the gain is classified as Short Term Capital Gain and taxed at your applicable income tax slab rate, which can be as high as 30 percent for higher earners. If you have held the property for more than 24 months, the gain is a Long Term Capital Gain.

For properties sold on or after July 23, 2024, the NRI long term capital gains property India rate is 12.5 percent without indexation. Properties acquired before that date and sold before July 23, 2024 were taxed at 20 percent with indexation. Most NRIs selling in 2026 will face the new 12.5 percent LTCG rate on their Mumbai flat.

When an NRI sells property in India, the buyer must deduct TDS before releasing payment. This is not optional. The TDS rate NRI property sale 2026 is 12.5 percent for long term gains and 30 percent for short term gains, plus a 4 percent health and education cess. A surcharge applies based on total income, which can push effective TDS rates higher.

The critical thing to understand is that TDS is deducted on the full sale consideration, not just the gain. If you sell your Mumbai apartment for Rs 2 crore and your actual gain is Rs 50 lakh, the buyer still deducts TDS on the entire Rs 2 crore unless you have a Lower Deduction Certificate.

This is the most powerful tax planning tool available to an NRI seller and the most overlooked. You can apply to the Income Tax Department for a Lower Deduction Certificate Form 13 under Section 197. If the department accepts your application, the buyer deducts TDS only on your actual tax liability rather than the full sale consideration.

For a Rs 2 crore sale where your actual LTCG tax liability is Rs 6.25 lakh, the difference between paying TDS on the full amount versus paying on actual liability is enormous. Apply for this certificate at least 4 to 6 weeks before the registration date to avoid delays.

Even after paying TDS, NRIs can legally reduce or eliminate their capital gains tax liability through reinvestment. Section 54 capital gains exemption NRI property sale India applies when you sell a residential property and reinvest the long term capital gains into another residential property in India.

You must purchase the new property either one year before the sale or within two years after it. Alternatively, you can construct a residential property within three years of the sale. The exemption is limited to the amount of capital gains reinvested. The new property must be located in India and cannot be sold within three years of purchase.

If you cannot reinvest by the date of filing your income tax return, deposit the gains in a Capital Gains Account Scheme at a designated PSU bank. This preserves your exemption claim until you are ready to invest.

After the sale, you need to move the proceeds to your overseas account. The NRI property sale repatriation India process is governed by FEMA and RBI regulations. You must submit Form 145 (previously Form 15CA) as a self-declaration and Form 146 (previously Form 15CB) as a Chartered Accountant's certificate to your bank before any international transfer is processed.

RBI permits repatriation of up to USD 1 million per financial year from NRO balances. If the property was originally purchased using foreign currency through NRE or FCNR accounts, you can repatriate the original foreign currency amount directly, subject to a limit of two residential properties.

From October 1, 2026, buyers no longer need a TAN to deduct and deposit TDS on NRI property sales. They can use their existing PAN instead, which significantly simplifies the process and should reduce buyer hesitation in transacting with NRI sellers.

NRI tax on sale of apartment Mumbai involves LTCG at 12.5 percent without indexation for properties held over 24 months, TDS deducted by the buyer under Section 195 on the full sale value, and repatriation via Forms 145 and 146. Apply for a Lower Deduction Certificate well before registration to avoid excess TDS. Use Section 54 reinvestment to reduce or eliminate capital gains tax. Engage a qualified CA experienced in NRI transactions before signing anything.