When an NRI in Singapore 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. Singapore does not tax capital gains for individuals under its domestic law, so the India-Singapore Double Taxation Avoidance Agreement's relevance for this specific gain is narrower than for an NRI in a country that does tax capital gains, though other aspects of the treaty may still matter depending on the NRI's overall tax position.
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 Singapore 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 Singapore 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 a Singapore bank
account as it is for any other destination country.
Why the double-taxation question looks different from Singapore
Singapore does not levy tax on capital gains for individuals under its own domestic law, so unlike
an NRI in Germany or New Zealand -- who typically needs DTAA relief against home-country tax on the
same gain -- an NRI in Singapore generally has no Singapore-side capital gains tax to seek relief
against for this specific transaction. This does not reduce the Indian tax or TDS obligation in any
way. An NRI in Singapore should still confirm their overall reporting position with a cross-border tax
advisor, since other income types or residency facts can affect what needs to be disclosed.
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 Singapore's lack of a capital gains tax eliminates all Indian reporting
obligations -- it does not; the Indian TDS and filing requirements apply regardless.
