Selling Indian property while you are a French tax resident

India taxes the full capital gain from your original cost. For long-term property sold on or after 23 July 2024, the rate is 12.5% without indexation, and as an NRI you get neither the resident option of 20% with indexation nor any currency relief for the rupee's fall, so the whole rupee gain is taxed. The buyer must deduct TDS under Section 195 on the gain, plus surcharge and cess, not the small 1% that applies to a resident seller.

Because the TDS is heavy, a lower-deduction certificate is worth getting so the buyer withholds closer to the real tax, and any excess is reclaimed by filing an Indian return. India taxes the gain whatever France does, and as the next section shows, France largely stands back.

This is where the treaty is generous. France ordinarily taxes a resident's property gains at 19% plus 17.2% social charges. But the treaty relieves an Indian property gain by giving France a credit equal to its own tax on that gain, which is a fancy way of saying France does not actually tax the gain a second time. It only takes the gain into account to set the tax rate on the rest of your French income, and it applies no French property-gains tax and no social charges to the Indian gain itself.

So, unlike a resident of many other countries who would face a heavy second charge, a French resident selling Indian property pays no French tax on the gain, and India's 12.5% is the only real cost. That is a genuinely favourable outcome, and it is worth understanding so you do not overpay in France by treating the gain as ordinarily taxable there.

The sting is not on the sale but on the holding. France has a wealth tax on real estate, the impôt sur la fortune immobilière or IFI, which applies to a French resident's worldwide real estate, including your Indian property, once the total net value of your real estate exceeds €1.3 million. And here the treaty does not save you: it relieves wealth tax by crediting any foreign wealth tax paid, but India has no wealth tax, so there is nothing to credit, and the Indian property sits fully in the French IFI base.

This catches people out because it is the reverse of the income position: France steps back from the gain but taxes the mere ownership through the IFI. The value of the Indian property, net of any loan against it, counts towards the €1.3 million threshold and is taxed at the IFI rates while you own it. That wealth-tax side, how the Indian property is valued and declared for the IFI, is its own subject worth handling deliberately. A practising CA computes the Indian sale tax, gets the lower-deduction certificate, and provides the property value your French adviser needs for both the progression on the gain and the IFI while you hold it.