When an NRI in Tanzania 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. The India-Tanzania DTAA, signed 27 May 2011, confirms treaty-based relief may be available under Sections 90/90A, though this platform recommends confirming the exact applicable rate directly given two gaps it flags around the treaty text. 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 Tanzania 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 Tanzania 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 -- available, with two confirmed gaps to check
An India-Tanzania Double Taxation Avoidance Agreement exists, signed 27 May 2011 at Dar es Salaam, so
treaty-based relief under Sections 90/90A of the Income Tax Act is generally available on the same
capital gain. However, this platform flags two specific gaps it could not close in this round of
research: the treaty's Fees for Technical Services rate was not specified in the government summary
this platform reviewed, and the exact entry-into-force/notification date could not be confirmed (only
the 27 May 2011 signing date is confirmed). Neither gap affects the confirmed dividends, interest, and
royalties rates, but an NRI seller relying on treaty relief for a capital gain should still confirm the
applicable provision directly against the Income Tax Department's current treaty text 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).
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 Tanzania's own absence of an estate/inheritance tax with Indian tax on the sale of
Indian property -- these are entirely separate regimes.
Do I need a PAN card to sell property in India as an NRI in Tanzania?
Yes -- a PAN is mandatory for the transaction and for correct TDS deduction, and will be needed to
file the Indian income tax return reporting the sale.
Can I claim DTAA relief on the capital gain from an inherited property sale connected to Tanzania?
Generally yes -- the India-Tanzania DTAA exists and was signed 27 May 2011, so treaty-based relief is
available; the specific computation should be confirmed with a chartered accountant before the sale
closes, given this platform's flagged gaps around the treaty's FTS rate and exact in-force date.
Does Tanzania's own tax system affect the sale of property in India?
No -- Tanzania has no inheritance, estate, or gift tax of its own, and selling property located in
India is governed entirely by Indian tax law (Section 195 TDS, capital gains rules), regardless of
Tanzania-side tax treatment.
