Property, Rental

Someone is occupying your Indian property: what the 12-year clock really means

The house is shut or a caretaker has the keys, you visit once every few years, and you have heard that after twelve years the occupier can claim it.

A relative, a caretaker, an old tenant or a neighbour has been in your Indian property or across your boundary for years, and someone has told you that after twelve years it becomes theirs. You are thousands of miles away, you cannot drop in to check, and you do not know whether the clock has already started or how much of it is left. Two things settle most of the panic: the twelve years do not run from the day they moved in, and permission is fatal to their claim.

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Last reviewed: 5 September 20269 min readReviewed by Preetesh Maloo, CA

The short answer

A suit to recover possession of private immovable property on the strength of your title must be filed within twelve years, and those twelve years run from the date the occupier's possession becomes adverse to you, not from the date they moved in (Article 65, Limitation Act 1963). Adverse means open, continuous and hostile to your title, so a caretaker or tenant who is there with your permission is not on the clock at all until they openly deny your ownership and you know it. Where the land belongs to the Central or a State Government the period is thirty years (Article 112). If you let the period run out, Section 27 does not merely bar your suit, it extinguishes your ownership, and a three-judge Supreme Court bench has held the occupier can then sue on adverse possession as a claimant, not only raise it as a defence (Ravinder Kaur Grewal v. Manjit Kaur, 7 August 2019). Living abroad does not pause any of this.

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Related situations

The twelve years run from hostility, not from occupation

The clock starts the day the occupier's possession turns adverse to you, which is not the day they took the keys.

Under Article 65 of the Limitation Act 1963, a suit for possession of immovable property based on your title must be brought within twelve years, and the period begins "when the possession of the defendant becomes adverse to the plaintiff". Adverse possession has to be peaceful, open, continuous and hostile to the true owner. Secret occupation does not count, and neither does occupation with your consent.

Situation	Period	Runs from
You sue on your title (Article 65)	12 years	When the occupier's possession became adverse to you
You were in possession and were pushed out (Article 64)	12 years	The date of dispossession
The owner is the Central or a State Government (Article 112)	30 years	When it would start against a private owner

The consequence of letting it lapse is harsher than most people expect. Section 27 extinguishes your right to the property, not just your remedy, and in Ravinder Kaur Grewal v. Manjit Kaur (7 August 2019) a three-judge Supreme Court bench held that a person who has completed the period can sue on adverse possession as a claimant, not merely defend with it.

One thing to be clear about before you read further: the suit, the injunction and the police complaint are an advocate's work. A chartered accountant cannot appear for you in a civil court. What follows separates the part you need a litigation lawyer for from the part that is a tax and money question.

A caretaker or tenant with your permission is not on the clock

Permissive possession is not adverse possession, and that is usually the strongest fact an NRI owner has.

Someone who entered with your consent, a tenant, a caretaker, a cousin looking after the house, holds under you, not against you. Their years do not accumulate towards anything while the permission lasts. The clock only starts if that possession turns hostile: they must assert ownership in denial of your title, openly enough that you know or ought to know. Courts want the date of that switch proved, and a defendant who cannot show when permission ended and hostility began generally fails.

The acts that typically mark the switch are worth watching for, because they are also the ones that do you real damage:

1. Rent or the caretaker's payments stop and they refuse to account. 2. They apply to change the mutation in the revenue record into their own name. 3. They deny your title in writing, in a reply to a notice, or in a court filing. 4. They try to sell, mortgage or lease the property as owner.

Number two is the common one for overseas owners, and a mutation entry is worth understanding on its own terms: it records who pays the property tax, not who owns the land, and the Supreme Court has said it confers no title. We cover reversing one in undoing a wrongful mutation from abroad. It is still the loudest early warning you will get.

Six months and twelve years are two different doors

If you were physically pushed out of a property you held, there is a fast door that closes in six months.

Section 6 of the Specific Relief Act 1963 lets a person dispossessed without their consent, otherwise than in due course of law, sue to recover possession without having to prove title at all. The court simply restores possession to whoever had it. It is quick because the title fight is postponed. Three limits matter: the suit must be filed within six months of dispossession, no appeal or review lies from the decree, and it cannot be brought against the Government.

Miss the six months and you are back to the ordinary route, a suit on your title under Article 65, where you prove ownership and the other side gets to argue adverse possession. Same property, far longer road.

So the single date your file most needs is the date you lost possession, or the date the occupier first denied your ownership. Emails, WhatsApp messages, the last rent receipt, a returned notice, the date a mutation was applied for: these are the papers that fix it. Reconstructing that date three years later is what turns a straightforward matter into a long one.

Being abroad does not pause the clock

There is no allowance in Indian limitation law for an owner who lives overseas.

Section 15(5) of the Limitation Act excludes the time the defendant was absent from India. It says nothing about the plaintiff. Your years in Dubai or Toronto are counted against you exactly as if you had been in the next street. The only extensions the Act gives are for legal disability such as minority, and they do not cover distance.

What does help is Section 17. Where the suit is based on the other side's fraud, or your knowledge of your right was concealed by fraud, time does not begin to run until you discovered it, or could with reasonable diligence have discovered it. That is why a wrongful mutation obtained on a forged document sits differently from a neighbour who has simply been there since 2011.

Two habits are worth more than any argument later. Check the state's online land record for the property once a year and save the extract with its date, because that is what fixes when you discovered a change. And keep the permission alive in writing: a dated caretaker letter or a renewed rent receipt is a complete answer to a hostility claim, and it costs nothing.

What you pay to clear it, and whether tax lets you deduct it

Money paid to get an occupier out is deductible only if you can show it bought back an interest you had lost, or that the sale required it.

The Supreme Court drew the line in a pair of 1997 judgments. Where you inherit property carrying an encumbrance the previous owner created, and you pay to clear it, you acquire the other side's interest and the payment is part of your cost of acquisition (R.M. Arunachalam v. CIT). Where the encumbrance was created after the property became yours, clearing it buys you nothing you did not already own, and it is not deductible (V.S.M.R. Jagadishchandran v. CIT).

Worked example. Anita inherited a Coimbatore plot from her father in 2009 and lives in Melbourne. A neighbour's compound wall crept over a fifth of it in 2014. In 2026 a buyer offers Rs 1.4 crore on condition the boundary is clear, and Anita pays the neighbour Rs 12 lakh to move the wall and sign a release. That Rs 12 lakh is not cost of acquisition: her father created no right in the neighbour, so Anita never lost an interest she had to buy back. Her CA's argument is the other route, Section 48, that the payment was incurred wholly and exclusively in connection with the transfer, and the file has to prove it: the buyer's condition in writing, the registered release, and the payment trail dated before completion. Had the wall stood in her father's time under a registered right, the answer flips and the Rs 12 lakh goes into cost.

The general litigation bill is harder. Ordinary costs of a possession suit are not automatically deductible, so keep the invoices split between work done to perfect the title and work done for the sale itself.

When it resolves and you sell, the occupation shows up twice

An occupied or encroached property sells cheap, and the tax law does not automatically accept the cheap price.

Section 50C deems the state's stamp-duty value to be your sale consideration whenever that value is more than 110% of what you actually received, with no built-in exception for a genuine reason. The rebuttal is Section 50C(2), a reference to the Departmental Valuation Officer, who can factor in the sitting occupier or the encroachment. It has to be raised, not assumed. The detail is on selling a tenant-occupied or encroached property below its stamp value and disputing the valuation through the DVO.

The second appearance is in the withholding. As a non-resident seller, your buyer deducts under Section 195 on your consideration, and where the property is co-owned the deduction is per owner, not one blanket figure. If a co-heir is still disputing the split, selling your share of a disputed or co-owned property covers how the gain and the TDS are apportioned.

And if the property has been in the family since before 1 April 2001, the cost you deduct can be its fair-market value on that date rather than the old purchase price, which on a long-disputed family property is usually the largest single lever you have: cost basis of an inherited Indian asset.

What's involved

What the CA actually does

1
We tell you whether the payout becomes cost
Before you settle with an occupier, we apply the R.M. Arunachalam test to your facts and tell you whether the money lands in cost of acquisition, in transfer expenditure under Section 48, or nowhere, and what the file has to show for each.
2
We keep the Indian tax file clean while it drags
A property that produces nothing for years still has a house-property position in your return. We take it correctly so a long dispute does not turn into a notice or a defective return you have to answer from abroad.
3
We reconstruct the cost history before it is lost
Original deeds, the 1 April 2001 fair-market value where the property is old, and improvement records. These are the numbers that shrink the eventual gain, and families that wait until the sale usually cannot find them.
4
We handle the sale-side tax when it resolves
The Section 50C(2) reference where the occupation depressed the price, the Section 195 deduction split correctly across co-owners, and a lower-deduction certificate so the buyer withholds on your real gain rather than the gross value.
5
We work to your advocate's brief, not instead of it
The possession suit, the injunction and the police complaint belong to a litigation advocate you appoint. We supply the cost record, the valuation position and the tax consequence of each settlement option, so the legal decision is made with the money side visible.

What to have ready

Documents you'll typically need

The title deed or succession document, and the latest property tax receipts
The current mutation or revenue-record extract, with the date you pulled it
Any rent agreement or caretaker arrangement, and when payments stopped
Correspondence showing when the occupier first denied your title
Purchase price, improvement bills, and a 1 April 2001 valuation if the property is older

References on this page

Article 65, Limitation Act 1963: 12 years to recover possession on title, running from when the occupier's possession becomes adverse
Article 64, Limitation Act 1963: 12 years from the date of dispossession, where the claim rests on previous possession and not title
Article 112, Limitation Act 1963: 30 years where the suit is by the Central or a State Government
Section 27, Limitation Act 1963: the owner's right to the property is extinguished, not merely the remedy
Section 15(5), Limitation Act 1963: only a defendant's absence from India is excluded, not the owner's
Section 6, Specific Relief Act 1963: summary suit to recover possession, 6 months from dispossession, not available against the Government
Ravinder Kaur Grewal v. Manjit Kaur (2019) 8 SCC 729: adverse possession can found a claim, not only a defence
R.M. Arunachalam v. CIT (1997) 227 ITR 222 (SC): clearing an encumbrance created by the previous owner is cost of acquisition

Frequently asked questions

Common questions

Only if their possession was adverse for those twelve years. Article 65 of the Limitation Act gives you twelve years to sue on your title, running from when the occupier's possession became hostile to you, not from when they moved in. If the period does run out, Section 27 extinguishes your ownership itself, and the Supreme Court held in Ravinder Kaur Grewal v. Manjit Kaur (2019) that the occupier can then sue on adverse possession rather than only defend with it. Where the land is Government-owned the period is thirty years.

Not on those facts alone. He entered with your permission, so he holds under you, and permissive possession never counts towards adverse possession. The clock would only have started if he openly denied your ownership and you knew or ought to have known, and he would have to prove the date that happened. Keep the permission documented, a dated caretaker letter or receipt, because that single paper answers the claim.

No. Section 15(5) of the Limitation Act excludes only the time a defendant was absent from India, not the owner. Your years overseas count against you in full. The one relief that can help is Section 17: where the claim rests on the other side's fraud, or fraud concealed your knowledge, time runs from when you discovered it or could reasonably have discovered it.

Two different windows. If you were physically dispossessed, Section 6 of the Specific Relief Act gives a summary suit that restores possession without proving title, but it must be filed within six months of dispossession, allows no appeal, and cannot be used against the Government. Beyond that you are on the ordinary twelve-year suit on title under Article 65. Fix the date of dispossession in writing early, because both windows are measured from it.

It depends on who created the problem. Clearing an encumbrance the previous owner created buys you their interest and counts as cost of acquisition (R.M. Arunachalam v. CIT, 1997). Clearing one that arose after the property became yours does not, because you acquired nothing you did not already own. The remaining route is Section 48, that the payment was made wholly and exclusively in connection with the sale, which needs the buyer's condition, the release deed and the payment trail on file.

No, and you should be careful of anyone who says otherwise. Recovering possession is court work and needs a litigation advocate; a chartered accountant cannot appear for you in a civil court. What a practising CA does is the money side: whether a settlement payment is deductible, the cost history, the valuation position under Section 50C(2) if the occupation depressed the price, and the Section 195 withholding when the property finally sells.

The exceptions that change the answer

Where the general rule stops applying to you

Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.

TDS rate when buying property from an NRI

Right now: 12.5% plus surcharge and cess on LTCG

Where it works differently

The gain is short-term: TDS is at the applicable slab rate, effectively 30% plus surcharge and cess for most NRI sellers.; s.195 requires deduction at 'rates in force' for the actual character of the income.
No lower-deduction certificate is obtained: TDS applies to the ENTIRE SALE CONSIDERATION, not to the gain.; s.195 operates on the sum paid unless the AO determines otherwise. This is the whole commercial case for Form 13 / Form 128.
There are joint NRI sellers: TDS is deducted separately against each seller's PAN in their ownership proportion.; Rule 37BA. Deducting entirely against one PAN strands the other's credit.
The buyer deducts 1% under s.194-IA: Wrong section. The buyer becomes an assessee-in-default under s.201 for the shortfall plus 1% per month interest and penalty under s.271C.; s.194-IA applies only where the seller is a RESIDENT.

Commonly got wrong

TDS on property purchase is 1% over Rs 50 lakh. That is s.194-IA, for RESIDENT sellers only. For a non-resident seller it is s.195 at the full capital-gains rate, with no threshold.1% applies only if the seller is a resident. NRI seller means s.195 at 12.5% plus surcharge and cess on the whole consideration unless a certificate is obtained.
The buyer files Form 26QB. 26QB (now Form 141) is for s.194-IA. An NRI-seller purchase needs a TAN and Form 27Q (now Form 144).Buying from an NRI, you need a TAN, you deduct under section 195, and you file Form 27Q (Form 144 from 1 April 2026). Form 26QB is only for resident sellers.

If this matched your situation, these go further

Selling a tenant-occupied or encroached property for less than its stamp value The assessing officer challenges your property valuation, on cost or on sale price Selling your share of a disputed or jointly-owned property What cost you deduct when you eventually sell an inherited Indian asset Form 13 lower-TDS certificate (property sale)Inherited Indian property tax Capital gains calculator Property sale TDS calculator