Selling Inherited Property in India as an NRI in Uganda -- TDS, Capital Gains & Repatriation

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 Uganda as it would be for one based anywhere else. Where the inherited property in question has any historical link to assets confiscated in Uganda during the 1972 expulsion and later addressed through the Expropriated Properties Act, 1982, that Uganda-side restitution history is a separate matter from the Indian tax computation and does not itself change how Indian capital gains tax is calculated.

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 Uganda 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 -- a confirmed, uniform 10% treaty rate

The India-Uganda Double Taxation Avoidance Agreement was signed 30 April 2004 at Kampala and entered into force 27 August 2004, effective from 1 April 2005 in India and 1 July 2005 in Uganda -- confirmed directly against the Uganda Revenue Authority's own published treaty page. Distinctively, the treaty caps dividends, interest, and royalties/Fees for Technical Services all at a uniform 10%, with royalties and FTS combined under a single article and rate rather than split as in some other India treaties. This platform did not find an MFN (most-favoured-nation) clause in the treaty, though this is a light hedge rather than an absolute finding. 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.
• Conflating Uganda's Expropriated Properties Act restitution history with Indian tax rules on the sale of Indian property -- these are entirely separate legal regimes in two different countries.