When an NRI in Trinidad and Tobago 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. Relief against double taxation is available under the India-Trinidad and Tobago DTAA where relevant, 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 Trinidad and Tobago 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 Trinidad and Tobago 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 DTAA relief
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).
Where the India-Trinidad and Tobago DTAA (in force since 13 October 1999) provides relief against double
taxation on the same gain, an NRI can claim it by furnishing a Tax Residency Certificate from Trinidad and
Tobago along with Form 10F.
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.
- Not obtaining a Tax Residency Certificate before claiming DTAA relief on the gain.
Do I need a PAN card to sell property in India as an NRI in Trinidad and Tobago?
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 India-Trinidad and Tobago DTAA relief on the capital gain from an inherited property sale?
Potentially, depending on the specific facts -- furnish a Tax Residency Certificate from Trinidad and
Tobago along with Form 10F, and confirm the applicable relief with a chartered accountant familiar with the
current treaty text.
Can I reinvest the sale proceeds to reduce capital gains tax?
Generally yes, subject to conditions -- Section 54 and Section 54EC are the commonly used exemptions;
check current eligibility with a chartered accountant.
