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New Zealand

Selling Indian property while you are a New Zealand tax resident

New Zealand has no general capital gains tax, so a long-held Indian property is usually taxed only by India.

You are selling a property in India, and you are a tax resident of New Zealand. The good news is that New Zealand has no general capital gains tax, so for a property you have held a while, India's tax is usually the only one. But there is a specific exception, the bright-line test, that can bring New Zealand tax if you sell soon after buying, and it reaches overseas property too. Here is how the sale really works.
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Last reviewed: 26 July 20266 min readReviewed by Preetesh Maloo, CA

The short answer

India taxes the whole gain on your Indian property at 12.5% without indexation, with the buyer deducting TDS under Section 195. New Zealand has no general capital gains tax, so a gain on a property you have held for a while is generally not taxed in NZ at all, which means India's 12.5% is the only tax. The exception is the bright-line test: if you sell residential property within two years of buying it, New Zealand taxes the gain as income, with a credit for the India tax, and this test applies to overseas property held by a NZ resident too. A recent migrant may also be sheltered by the four-year transitional-resident exemption.

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Related situations

The India side: the whole gain at 12.5%

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. A lower-deduction certificate reduces the withholding, and any excess is reclaimed by filing an Indian return.

New Zealand: usually nothing, unless the bright-line bites

New Zealand is unusual among the countries Indians move to in having no general capital gains tax. So a gain on selling your Indian property is, as a rule, simply not taxed in New Zealand, and India's 12.5% is the only tax you pay. For most people selling a property they have owned for years, that is the whole story.

The exception is the bright-line test. If you sell residential land within two years of buying it, that quick gain is taxed as income in New Zealand, and importantly, the test applies to overseas residential property held by a NZ resident, not just NZ land. Where it bites, New Zealand taxes the gain but gives a credit for the India tax, since India has the primary right to tax Indian property. A separate shelter can also apply: a recent migrant within the roughly four-year transitional-resident window is generally exempt in NZ on this foreign-sourced gain anyway. So the practical rule is: a long-held Indian property is taxed only by India at 12.5%, and only a sale within two years of buying brings a New Zealand charge, with a credit.

What's involved

What the CA actually does

  1. 1

    We compute the real Indian gain

    We work the gain from your original cost with the correct 12.5% NRI treatment, so the Indian tax is right and not overpaid.

  2. 2

    We cut the TDS to the real tax

    We get a lower-deduction certificate so the buyer withholds on your actual gain, not the gross, and reclaim any excess on your return.

  3. 3

    We check the bright-line and window

    We flag whether a quick resale falls in the two-year bright-line period, or whether the four-year transitional window shelters the gain in NZ.

  4. 4

    We support any NZ credit

    Where the bright-line applies, we give your NZ accountant the India-tax-paid detail so the credit is claimed.

What to have ready

Documents you'll typically need

  • The original purchase deed and rupee cost
  • The purchase and sale dates, for the bright-line test
  • The sale agreement and the buyer's TDS
  • Your PAN, NZ residency date and tax details

References on this page

  • India taxes the full gain: LTCG 12.5% without indexation (from 23 July 2024), no grandfathering or forex relief for NRIs, TDS under Section 195
  • New Zealand has no general capital gains tax, so a long-held Indian property gain is generally not taxed in NZ
  • The bright-line test (2 years from 1 July 2024) taxes a quick resale of residential land, including overseas property, with a credit for the India tax
  • A recent migrant may be sheltered by the 4-year transitional-resident exemption

Frequently asked questions

Common questions

Generally not. NZ has no general capital gains tax, so a gain on a property you have held for a while is not taxed in NZ, and India's 12.5% is the only tax. The exception is a sale within two years of buying, under the bright-line test.

A rule taxing the gain on residential land sold within two years of buying it (for purchases from 1 July 2024) as income. It applies to overseas residential property held by a NZ resident too, and where it bites, NZ gives a credit for the India tax.

It can. A new migrant within the roughly four-year transitional-resident window is generally exempt in NZ on foreign-sourced income and gains, which can cover an Indian property gain during that period.

Yes. The buyer deducts under Section 195 on the gain, which is heavy, so a lower-deduction certificate lets them withhold closer to your real tax, and any excess is reclaimed by filing an Indian return.

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.

LTCG rate: assets other than STT-paid listed equity (includes property)

Right now: 12.5% without indexation

Where it works differently

A RESIDENT individual or HUF sells land or a building acquired before 23 July 2024
May elect the lower of 12.5% without indexation or 20% with indexation.
Grandfathering proviso inserted by Finance (No. 2) Act 2024.
A NON-RESIDENT sells the same property
12.5% without indexation only. The election is NOT available.
The grandfathering proviso is expressly limited to resident individuals and HUFs. This is the highest-value NRI distinction on the site.
Shares or debentures of an Indian company were bought in convertible foreign exchange by a non-resident
The first proviso to s.48 computes the gain in that foreign currency, neutralising rupee depreciation. This is separate from, and not lost with, indexation.
First proviso to s.48 survives the 2024 changes.
Adding surcharge and cess
Surcharge on capital gains under s.111A/112/112A is capped at 15%, plus 4% health and education cess.
The cap applies to gains under s.111A, s.112 and s.112A.

Commonly got wrong

  • NRIs can choose 20% with indexation on property bought before July 2024. The election is resident-only. Stating otherwise understates an NRI's tax, which is the worst direction to be wrong in.Residents may elect 20% with indexation for pre-23-July-2024 land and buildings. Non-residents get 12.5% without indexation, full stop.
  • LTCG on property is 20%. Stale since 23 July 2024 unless the transfer predates it.12.5% for transfers on or after 23 July 2024.

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.

Related

If this matched your situation, these go further

Indian rental income when you are a New Zealand tax residentNRE and NRO interest when you are a New Zealand tax residentSelling Indian property as an NRI: the rupee-depreciation trapForm 13 lower-TDS certificate (property sale)NRI ITR filing (we file for you)DTAA TDS recoveryCapital gains calculatorProperty sale TDS calculator

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