When an NRI in Oman 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. Oman currently has no personal income tax, so there is generally no Oman-side tax on this gain today, though Oman has enacted a personal income tax planned for 2028 that NRIs in Oman should watch for future transactions. The NRI can 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 Oman as it would be for one based
anywhere else.
TDS under Section 195 -- why it is higher than for resident sellers
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.
Getting a lower or nil TDS certificate (Form 13 / Section 197)
An NRI seller in Oman 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
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 process is the same for an NRI remitting to an Oman bank account
as it is for any other destination country.
Why Oman is a forward-looking exception on the double-taxation question
Oman currently levies no personal income tax, so there is generally no Oman-side tax on this capital
gain to seek relief against today -- similar to Saudi Arabia, Qatar, Kuwait, and Bahrain. This is
likely to change, however: Oman has enacted a personal income tax as part of its Vision 2040 fiscal
diversification plan, expected to take effect in 2028. NRIs in Oman planning a sale close to or after
that date should confirm the then-current Oman tax treatment and whether India-Oman DTAA relief becomes
relevant. This uncertainty does not affect the Indian TDS or filing obligation in any way, which
applies regardless.
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.
- Assuming Oman's current tax-free status is permanent and not monitoring the planned 2028
personal income tax for future transactions.
