When an NRI in Nigeria sells inherited property in India, the buyer must deduct TDS under Section 195 of the Income Tax Act, generally at 20% plus applicable surcharge and cess on long-term capital gains. Because no India-Nigeria DTAA currently exists, treaty-based relief under Sections 90/90A is not available -- only domestic relief provisions apply -- though the NRI can still repatriate net proceeds abroad, up to USD 1 million (or equivalent) per financial year, from an NRO account, subject to Form 15CA/15CB certification.
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 Nigeria 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 Nigeria 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.
No DTAA relief -- and what that means in practice
Unlike most countries this platform covers, no India-Nigeria Double Taxation Avoidance Agreement
currently exists. The High Commission of India, Abuja's own page describes a treaty as being under
negotiation alongside an updated 1983 Economic Cooperation Agreement, but neither has been signed or
brought into force as of this writing. This platform has also seen a circulating but unverified claim of
a “7.5% India-Nigeria DTAA interest rate” -- there is no such treaty in force, and this
figure should not be relied upon. In practice, this means an NRI seller in Nigeria cannot claim
treaty-based relief under Sections 90/90A of the Income Tax Act on the capital gain from an Indian
property sale; only domestic relief provisions (where applicable) and Nigeria's own foreign tax credit
mechanism, if any, would apply on the Nigeria side.
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). This repatriation mechanism is unaffected by the absence of a DTAA -- it is a separate,
standing FEMA rule.
Common mistakes in this process
- Assuming the resident 1% TDS rate applies once the seller has become an NRI.
- Assuming DTAA relief is available for capital gains, when no India-Nigeria treaty currently
exists.
- 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.
