CA Naveen Pandey
CA + CS + CMA (AIR 5)
Founder : Naveen Pandey & Associates
has handled capital gains planning and Section 82/86 exemption claims for Dwarka property sellers since 2014.
Capital Gains Tax on Dwarka Property Sale — Section 54 Guide 2026
NRI Property Sale Guide — By CA Naveen Pandey & Associates
If you’re selling a residential flat in Dwarka, your long-term capital gain is taxed at a flat 12.5%, or at 20% with indexation if you bought the property before 23 July 2024 and you’re a resident individual or HUF — whichever works out lower. On top of this, Sections 82, 85, and 86 (formerly Section 54, 54EC, and 54F) can reduce or wipe out that tax entirely if you reinvest correctly. We’ve handled Section 82 and 86 exemption claims for Dwarka sellers since 2014, and the rules genuinely changed this year with the Income-tax Act, 2025, so this guide walks through exactly what applies to your sale.
How Much Tax Will You Actually Pay?
Direct answer
When an NRI sells property in India, the buyer must deduct TDS under Section 393 (formerly Section 195) of the Income-tax Act, 2025 — not under Section 194-IA, which applies only when both buyer and seller are residents. Section 194-IA deducts 1% of the sale value. Section 393 deducts TDS at 12.5% on the long-term capital gain — or on the entire sale value if no Lower Deduction Certificate has been obtained.
Your capital gain is long-term if you held the property for more than 24 months, and short-term if you sold within 24 months. This single line decides everything else about your tax treatment, so get it right before you calculate anything.
Short-term capital gains (STCG) on property are taxed at your normal slab rate. There’s no indexation, no special rate, and no exemption under Section 82, 85, or 86 — those provisions only apply to long-term gains.
Long-term capital gains (LTCG) work differently depending on when you bought the property. If you acquired the flat on or after 23 July 2024, your LTCG is taxed at a flat 12.5% without indexation, and there’s no alternative calculation. However, if you bought it before that date, and you’re a resident individual or resident HUF, the law gives you a choice: compute your tax both ways and pay whichever is lower. Non-resident sellers, including NRIs and OCIs, don’t get this choice. The ITR validation rules for AY 2026-27 specifically exclude non-residents from the indexation comparison, so if that’s your situation, our NRI property sale guide for Dwarka covers your rules separately rather than mixing the two here.
|
Purchase date |
Applicable rate(s) |
Choice available? |
|---|---|---|
|
On or after 23 July 2024 |
12.5% without indexation |
No — single rate applies |
|
Before 23 July 2024 (resident individual/HUF) |
12.5% without indexation OR 20% with indexation |
Yes — pay whichever is lower |
|
Before 23 July 2024 (non-resident) |
12.5% without indexation |
No — indexation comparison not available to NRIs/OCIs |
|
Held 24 months or less (any date) |
Slab rate (STCG) |
Not applicable |
As a rough guide, older purchases usually favour the 20%-with-indexation option, since more years of accumulated inflation shield a larger share of the gain. Recent purchases usually come out ahead on the flat 12.5% rate. Treat this as a starting point, not a substitute for actually running both numbers, since the actual crossover point depends on your specific purchase price, the Cost Inflation Index values for your purchase and sale years, and any improvement costs you can legitimately add to your acquisition cost.
Most common confusion
The SELLER’s NRI status determines which TDS section applies — not the buyer’s residency. Even if your Dwarka buyer is fully resident Indian, Section 393 applies to your sale, not the 1% resident rate.
A Worked Example — Older Dwarka Flat vs Recent Purchase
Example 1 — Flat Bought in 2015
Say you bought a flat in a Dwarka sector for ₹45 lakh in 2015 and sold it in 2026 for ₹1.4 crore. Under the flat 12.5% method, your gain of roughly ₹95 lakh is taxed directly, giving a tax outgo near ₹11.9 lakh. Under the 20%-with-indexation method, the Cost Inflation Index roughly doubles your purchase cost to around ₹85-90 lakh over that period, shrinking the taxable gain to somewhere near ₹50-55 lakh, and the tax at 20% works out to roughly ₹10-11 lakh, lower than the flat-rate figure. As a resident seller, you’d choose the indexed calculation here, and the gap widens further the longer you’ve held the property, since more years of inflation get factored into the indexed cost.
Example 2 — Flat Bought in August 2024
If you bought after 23 July 2024, this comparison doesn’t apply at all. Say you bought for ₹90 lakh and sold for ₹1.05 crore. Your gain of ₹15 lakh is taxed at 12.5% flat, giving a tax outgo of roughly ₹1.87 lakh, since indexation isn’t an option for post-23-July-2024 purchases regardless of your residential status. There’s no calculation to compare here; the flat rate is the only route.
For property held over 24 months (long-term), TDS is deducted at 12.5% on the capital gains amount (not the full sale value) if a Lower Deduction Certificate — now Form 128, formerly Form 13 — has been obtained. Without that certificate, TDS is deducted on the full sale value at the applicable rate. For STCG (property held 24 months or less), TDS is at the NRI’s applicable slab rate.
Worked example — Dwarka flat sold in 2026:
Note: Indexation benefit is not available for NRI property sales after the Finance (No. 2) Act, 2024 changes, which continue under the Income-tax Act, 2025. The old option of 20% with indexation does not apply.
The difference between having and not having Form 128 in place is significant — in this example, several lakhs of rupees more are withheld if the certificate is not obtained before sale.
How to Reduce TDS — The Lower Deduction Certificate (Form 128)
Form 128 (formerly Form 13 under the Income-tax Act, 1961) is a certificate from the Income Tax Department that allows the buyer to deduct TDS on actual capital gains rather than the full sale value. It is filed by the seller on the Income Tax e-filing portal before the sale is finalised. Timing matters — the application should be made before the sale agreement is signed, not after.
In our practice, the most common mistake we see Dwarka NRI clients make is assuming they can apply for Form 128 after the sale agreement is already executed. At that point, it is often too late — the buyer has already deducted at the higher rate and deposited TDS, and the NRI is left filing for a refund instead of having received the correct amount upfront.
If you are currently identifying a buyer for your flat in Dwarka Sector 21, 22, or 23, the Form 128 application should be among the first steps taken. Realistic approval timelines vary depending on the complexity of the case and department processing, but applications submitted before the sale agreement is finalised have the most practical impact.
Budget 2026 — new from 1 October 2026
From 1 October 2026, individual and HUF buyers purchasing property from an NRI seller no longer need a TAN — TDS can be deposited using the buyer’s PAN via a challan-cum-statement. Tax rates are unchanged. This is a paperwork simplification only, but many buyers are unfamiliar with the new procedure — factor this into your sale timeline planning.
Repatriating your sale proceeds — FEMA rules explained
An NRI can repatriate up to USD 1 million per financial year from property sale proceeds in India, via an NRO account, subject to CA certification. The repatriation requires Form 145 (formerly Form 15CA) — the remitter’s declaration — and Form 146 (formerly Form 15CB) — the CA’s certificate. Since 1 April 2026, these are the operative form names under the Income-tax Rules, 2026.
The form renaming is important to flag because many banks and chartered accountants are still referring to the old names informally. The underlying process is the same — CA certification that applicable taxes have been paid, followed by declaration to the bank — but the form numbers have changed.
|
Old Form (pre-April 2026) |
New Form (from April 2026) |
Purpose |
|---|---|---|
|
Form 15CA |
Form 145 |
Remitter’s declaration before outward remittance |
|
Form 15CB |
Form 146 |
CA certificate confirming tax compliance |
|
Form 13 (Lower TDS) |
Form 128 |
Application for Lower/Nil Deduction Certificate |
|
Form 27Q |
Form 144 |
Buyer’s quarterly TDS return for NRI seller |
The USD 1 million cap is cumulative across all remittances in a financial year — not per property or per transaction. The property must also have been originally acquired in accordance with FEMA regulations for repatriation to be permissible. As a result, confirming the original acquisition history is part of the process before remittance can proceed.
Section 54 and 54EC — can you save this tax legally
Yes. NRIs can claim exemption from LTCG tax under Section 54 (reinvestment in one residential property within specified timelines) and Section 54EC (investment up to ₹50 lakh in specified capital gains bonds within 6 months of the sale date) on the same terms as resident sellers. The common assumption that these exemptions do not apply to NRIs is incorrect.
Section 54 requires reinvestment in one residential property — either purchased within 1 year before or 2 years after the sale, or constructed within 3 years. The reinvestment must be planned before the sale is finalised. That timeline directly affects the Form 128 application as well — if the NRI intends to claim Section 54, the Lower Deduction Certificate application should reflect this expected exemption so that TDS is calculated correctly at source.
Section 54EC allows up to ₹50 lakh to be invested in specified capital gains bonds (currently NHAI and REC bonds) within 6 months of the sale. The bonds are locked in for 5 years and cannot be pledged. For NRIs selling higher-value Dwarka property where the gain significantly exceeds ₹50 lakh, Section 54EC can be combined with Section 54 to cover different portions of the gain.
What we see most often — NRI property sale mistakes in Dwarka
These are pattern-level observations from handling NRI property sale cases for Dwarka clients since 2014 — not statistics, but recurring situations we encounter consistently.
Not applying for Form 128 before the agreement is signed
The application is most effective when filed before the buyer and seller have agreed on a price and timeline. Once the agreement is executed and TDS deposited, the NRI is looking at a refund process — not a reduction at source.
Assuming the buyer’s resident status determines the TDS section
The seller’s NRI status triggers Section 393, not whether the buyer is Indian. Buyers who attempt to deposit at the 1% resident rate create a shortfall in TDS that the buyer must later account for.
Confusing TDS on full sale value with TDS on the gain
Without Form 128, TDS is deducted on the entire sale value — not just the profit. On a ₹1.2 crore Dwarka property where the gain is ₹85 lakh, the difference in cash withheld is several lakhs. Many NRI sellers realise this only after the transaction.
NRI co-owners not coordinating separately
Where a Dwarka property is jointly held, each co-owner’s tax position must be assessed individually. A Form 128 obtained by one co-owner does not cover the other — this must be handled separately for each NRI owner.
Not accounting for the 1 October 2026 TAN-removal change
From 1 October 2026, individual/HUF buyers no longer need a TAN — PAN-based challan applies. Sellers who planned the transaction timeline expecting the old TAN-based process may find the buyer unfamiliar with the new challan procedure, causing delays at registration.
This is not a blanket declaration that all these businesses must register. The applicable threshold, nature of supply, and current law determine the actual position for each business.
NRI property sales we handle near Dwarka — Sectors 18B, 21, 22, 23 and beyond
Location and service
Our office is in Vikaspuri, 4.7 km from central Dwarka. For NRI property sale cases, most of the work happens remotely — documents shared via WhatsApp and email, video calls across time zones, and family members in India coordinated for any in-person steps. NRI clients are not required to be in India for the tax and compliance process.
NRI property ownership in Dwarka is concentrated in Sectors 18B, 21, 22, and 23, with investment properties also common in Sectors 10, 12, and 6. A recurring client type in our practice is aviation-sector NRIs — pilots and cabin crew with IGI Airport-linked careers who hold Dwarka property from earlier in their careers. These clients often carry additional complexity around residential status determination that interacts directly with the property sale tax planning.
For broader chartered accountant services in Dwarka, see our CA in Dwarka page. Full details of our NRI Taxation and FEMA Advisory service are on our services page.
Frequently asked questions
For long-term property (held over 24 months), TDS is deducted at 12.5% on the capital gains, plus applicable surcharge and 4% health and education cess, under Section 393 (formerly Section 195) of the Income-tax Act, 2025. Without a Lower Deduction Certificate (Form 128), TDS is deducted on the full sale value at this rate, not just the gain.
A full exemption from TDS is rarely possible, but TDS can be reduced to the correct amount (based on actual gain rather than full sale value) by obtaining Form 128, the Lower Deduction Certificate, from the Income Tax Department before the sale agreement is finalised. NRIs can also reduce the taxable gain by claiming Section 54 or Section 54EC exemptions where eligible.
Under the Income-tax Rules, 2026 (effective 1 April 2026), Form 15CA is now Form 145 and Form 15CB is now Form 146. These forms are required for repatriation of sale proceeds from India — Form 145 is the remitter’s declaration and Form 146 is the CA’s certificate confirming tax compliance. The old names Form 15CA/15CB are no longer operative under current law.
An NRI can repatriate up to USD 1 million per financial year from the sale proceeds of Indian property, via an NRO account, subject to FEMA compliance and CA certification via Forms 145 and 146. This cap is cumulative across all remittances in the financial year and applies where the property was originally acquired in accordance with FEMA regulations.
You need a CA experienced in NRI taxation and FEMA compliance — ideally one who has handled Dwarka-specific property sale cases. The CA is specifically required for Form 146 (the CA certification for repatriation), and also needed for Form 128 application, ITR filing, and Section 54/54EC exemption planning. Physical proximity to Dwarka is helpful for document turnaround when family members are present in India, but most of the process can be handled remotely.
CA Naveen Pandey
CA | CS | CMA | B.Com, Delhi University | ICAI Registered
CA Naveen Pandey is the founder of Naveen Pandey & Associates, a Vikaspuri-based chartered accountancy firm serving 100+ Dwarka clients since 2014. He holds CA, CS, and CMA qualifications simultaneously — clearing CA Final in the first attempt in 2012. He specialises in ITR filing, NRI taxation, GST compliance, and transfer pricing. CA Naveen Pandey personally reviews every client file before it is assigned to the team.
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