When an NRI in Thailand 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 the India-Thailand DTAA exists, treaty-based relief under Sections 90/90A is generally available, and 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 Thailand 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 Thailand 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-Thailand DTAA exists and has been in force since 13 October 2015, an
NRI seller in Thailand 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 Thailand's own Inheritance Tax Act (which applies only to Thai-situs assets) 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 Thailand?
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 Thailand?
Generally yes -- the India-Thailand DTAA exists and has been in force since 13 October 2015, so
treaty-based relief is available; the specific computation should be confirmed with a chartered
accountant before the sale closes.
Does Thailand's own inheritance tax affect the sale of property in India?
No -- Thailand's Inheritance Tax Act applies only to Thai-situs assets. Selling property located in
India is governed entirely by Indian tax law (Section 195 TDS, capital gains rules), regardless of
whatever inheritance tax may have applied in Thailand.
