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Special Income

Selling a domain name or website as an NRI

The old escape route, no cost so no taxable gain, was closed in 2023. Now the whole sale price is taxable.

You are an NRI selling a domain name or a website you built up yourself, perhaps one with an Indian audience or a .in domain, and you want to know how the gain is taxed. There used to be a genuine argument that a self-built asset with no purchase cost simply could not be taxed as a capital gain, and for years sellers relied on it. A 2023 change to the law closed that door. Here is where you actually stand now, and the one situation where the old rule still matters.
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Last reviewed: 26 July 20266 min readReviewed by Preetesh Maloo, CA

The short answer

For a sale from the 2024-25 assessment year onwards, the whole sale price of a self-built domain or website is taxable as a capital gain. This is a real change. Earlier, a self-generated asset with no cost of acquisition often fell outside the capital-gains charge altogether, on the Supreme Court principle in B.C. Srinivasa Setty that you cannot compute a gain where there is no ascertainable cost. The Finance Act 2023 amended Section 55 to deem the cost of any other intangible asset or right to be nil, which means the computation no longer fails and the full consideration is now taxable. The Setty escape survives only for sales made before the 2024-25 assessment year. If instead you build and flip websites as a business, the profit is business income, not capital gains, and if you licence the site or earn ad revenue rather than sell it, that is royalty or business income. When an NRI sells an Indian-nexus asset, the buyer withholds under Section 195.

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Related situations

The 2023 change that closed the old escape

For years, selling a self-built intangible like a domain or website carried a surprising advantage. Because you never bought the asset, it had no cost of acquisition, and the Supreme Court in B.C. Srinivasa Setty had held that you cannot charge a capital gain where the cost is not ascertainable. So many self-generated assets fell outside the capital-gains net entirely.

That door is now largely closed. The Finance Act 2023 amended Section 55 to add any other intangible asset or any other right to the list of assets whose cost of acquisition is deemed to be nil, with effect from the 2024-25 assessment year. Once the cost is deemed nil, the computation no longer fails, and the entire sale consideration becomes a taxable capital gain under Section 45. So for a domain or website sold from that year onwards, do not rely on the old no-cost argument, it no longer works. The Setty principle still governs only sales made before the 2024-25 assessment year, or genuine disputes over whether a particular digital asset is really an intangible asset or right at all.

Sale, business or licence, and the NRI angle

How the money is taxed still depends on what you are really doing. If you sell a domain or website you held as an investment, it is a capital gain, long-term or short-term depending on how long you held it, now on the full consideration. If you are in the business of building and flipping sites, the profit is business income taxed at slab rates, not a capital gain. And if you do not sell at all but licence the site, or earn advertising or subscription revenue from it, that is royalty or business income rather than a capital gain, taxed on a different footing.

For an NRI, the Indian angle turns on nexus. A website aimed at an Indian audience, a .in domain, or an asset otherwise connected with India, produces Indian-source income on sale, so the buyer must withhold TDS under Section 195, the section for payments to non-residents, renumbered to Section 393(2) under the Income-tax Act, 2025 from FY 2026-27. The character of the receipt, capital gain, business income or royalty, decides the rate and which treaty article applies. A practising CA fixes the character, computes the gain correctly under the current nil-cost rule, and gets the buyer's withholding right so you are not over-deducted.

What's involved

What the CA actually does

  1. 1

    We fix the character

    We decide whether your sale is a capital gain, business income or a royalty, because that drives the rate and the treaty article.

  2. 2

    We compute the gain

    We compute the capital gain under the current rule that deems the cost nil, so it is correct rather than under-reported.

  3. 3

    We handle the TDS

    We get the buyer's withholding onto Section 195 at the right level, with treaty relief where you qualify.

  4. 4

    We check the old rule

    For a sale before the 2024-25 year, we check whether the old no-cost position still protects you.

What to have ready

Documents you'll typically need

  • Details of the domain or website and its Indian nexus
  • How and when you built or acquired it
  • The sale agreement and consideration
  • Your PAN, TRC and residency details

Your destination country can change the details

Requirements differ from one consulate, university and visa route to the next, how recent the figures must be, how long funds must have been held, and which certificates are mandatory. We assemble the documents around the exact checklist you're applying under. To see how India's tax treaty with your country of residence affects related filings, set your country below or compare all 46 countries.

References on this page

  • From AY 2024-25, the Finance Act 2023 deems the cost of any other intangible asset or right to be nil (Section 55), so the full sale price of a self-built domain or website is a taxable capital gain
  • The old escape, no ascertainable cost means no computable gain (B.C. Srinivasa Setty, Supreme Court), now survives only for sales before AY 2024-25
  • Building and flipping websites as a trade is business income, not capital gains; licensing or ad revenue is royalty or business income
  • When an NRI sells an Indian-nexus domain or website, the buyer withholds TDS under Section 195

Frequently asked questions

Common questions

No, not for a sale from the 2024-25 assessment year. The Finance Act 2023 amended Section 55 to deem the cost of any other intangible asset or right to be nil, so the full sale price is now a taxable capital gain. The old no-cost escape only works for earlier sales.

The Supreme Court in B.C. Srinivasa Setty held you cannot charge a capital gain where the cost of acquisition is not ascertainable. A self-built domain or website had no cost, so it fell outside the charge. The 2023 amendment closed that by deeming the cost nil.

No. If you build and sell websites as a business, the profit is business income taxed at slab rates, not a capital gain. Similarly, licensing a site or earning ad or subscription revenue is royalty or business income, not a capital gain.

For an Indian-nexus asset, the buyer withholds under Section 195, the section for payments to non-residents, renumbered to Section 393(2) under the 2025 Act from FY 2026-27. A treaty may reduce it with your tax residency certificate and Form 41.

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