Selling Inherited Property in India as an NRI in Indonesia -- 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 Indonesia as it would be for one based anywhere else.

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 in Indonesia 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.

Repatriation of sale proceeds via FEMA, and the treaty relief available

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). Because the India-Indonesia DTAA exists and has been in force since 5 February 2016, an NRI seller in Indonesia can generally rely on treaty-based relief under Sections 90/90A of the Income Tax Act on the same capital gain, rather than only unilateral relief.

Common mistakes in this process

• Assuming the resident 1% TDS rate applies once the seller has become an NRI.
• Not applying for the Section 197 lower-deduction certificate before the sale closes.
• Leaving Form 15CA/15CB paperwork until after proceeds reach the NRO account.
• Confusing Indonesia's own (nonexistent) inheritance tax position with Indian tax on the sale of Indian property -- these are entirely separate regimes, and Indonesia's lack of an inheritance tax has no bearing on the Indian-side TDS and capital-gains treatment.