Selling Inherited Property in India as an NRI in Bangladesh -- TDS, Capital Gains & Repatriation

How capital gains are calculated on inherited property

Under Section 49 of the Income Tax Act, the cost of acquisition for inherited property carries over from the original owner rather than resetting to the property's value on the date of inheritance, and the holding period counts from the original owner's date of acquisition -- so most inherited-property sales qualify for long-term capital gains treatment, with indexation benefit available where applicable. This computation is identical for an NRI seller based in Bangladesh as it would be for one based anywhere else. Where the property traces back through a family history connected to the Vested Property Act, establishing clean title before a sale can itself be the harder step, and this platform recommends resolving that question with specialized counsel before the tax mechanics below become relevant.

TDS under Section 195, and getting a lower or nil TDS certificate

Section 194-IA's 1% TDS applies only to resident sellers. For a non-resident seller, the buyer must instead deduct TDS under Section 195, generally on the full sale consideration at the capital-gains rate unless a lower-deduction certificate has been obtained. An NRI seller connected to Bangladesh can apply to the jurisdictional Assessing Officer, via Form 13 under Section 197, for a certificate authorizing TDS at a lower or nil rate based on the actual computed gain -- worth evaluating with a chartered accountant before the sale closes.

DTAA relief -- reported rates, with an explicitly flagged date gap

An India-Bangladesh Double Taxation Avoidance Agreement exists, so treaty-based relief under Sections 90/90A of the Income Tax Act is generally expected to be available on the same capital gain. This platform flags that it could not fully reconcile the treaty's exact signing date across the sources consulted during this research, and recommends confirming the applicable provision directly against the Income Tax Department's own published treaty text with a chartered accountant before the sale closes. Reported rates from a secondary tax-publisher source place dividends at 10% or 15% depending on ownership share, interest at 10%, and royalties at 10% -- this platform found no separate fees-for-technical-services article and no evidence of an MFN clause in this treaty.

Repatriation of sale proceeds via FEMA

Net sale proceeds are typically credited to the NRI's NRO account in India. FEMA rules permit repatriation abroad of up to USD 1 million (or equivalent) per financial year, cumulative across eligible remittances from that account, subject to the authorized dealer bank receiving Form 15CA (and Form 15CB where applicable). Where the proceeds trace back to a Vested-Property-linked estate, this platform recommends resolving title and any related administrative history with specialized counsel on both sides of the border before repatriation is even considered.

Common mistakes in this process:

• Relying on a specific India-Bangladesh DTAA signing date without confirming it against the Income Tax Department's own published treaty text, given the date inconsistency this platform's research encountered.
• Assuming an FTS-specific treaty rate or MFN treatment applies -- this platform found no evidence of either in this treaty.
• Not applying for the Section 197 lower-deduction certificate before a property sale closes.
• Treating a Vested-Property-linked estate's title question as settled without specialized counsel.