Selling Indian property as a UAE resident: the tax, the TDS and getting the money to Dubai

The UAE does not levy personal income tax, and it has no capital gains tax on individuals. The 9 per cent federal Corporate Tax is a tax on business profits. For a personal sale of a family flat in Pune, nothing is due in the UAE and there is no UAE return to file for it. If the property belongs to a business you run in the UAE, whether UAE Corporate Tax reaches the gain is a separate question to settle there.

People then hope the India-UAE tax treaty will reduce the Indian side, as it does for NRO interest. It does not. Under Article 13(1) of the treaty, gains from immovable property may be taxed in the country where the property is situated. The treaty sets no ceiling on that tax, so India charges its normal domestic rate. That is the difference from interest, where Article 11 caps India at 12.5 per cent.

Two practical consequences follow. First, a UAE tax residency certificate does nothing to the tax on a property gain, and you do not need Form 41 (formerly Form 10F) for the sale itself. Second, because the UAE gives you no credit and no second layer, every rupee of Indian tax you avoid paying wrongly is simply yours. The levers are Indian: the certificate, the computation and the reliefs.

When the seller is a non-resident, the buyer does not use the 1 per cent resident-seller route (Section 393(1), formerly 194-IA). The payment falls under Section 393(2), formerly Section 195. Strictly, tax is deducted on the sum chargeable to tax, at the time the buyer credits or pays you, whichever is earlier. In practice a buyer cannot compute your gain and carries the risk of under-deducting, so without a certificate or an order most buyers withhold the full rate on the whole sale price. A buyer can also apply to the Assessing Officer under Section 395(2), the successor to Section 195(2), to have the taxable portion determined.

On a long-term gain, surcharge is capped at 15 per cent, so a buyer who wants to apply 25 or 37 per cent to it is wrong. If you held the property for 24 months or less, the gain is short-term and taxed at slab rates; buyers then withhold at 30 per cent plus surcharge and cess, the 15 per cent cap does not apply, and the withholding can be higher than the table shows.

What the buyer has to file depends on the payment date and who the buyer is. For payments up to 30 September 2026, the buyer needed a TAN, deposited the tax against it, filed Form 144 (formerly Form 27Q) and gave you Form 131 (formerly Form 16A). From 1 October 2026, a buyer who is a resident individual or HUF needs no TAN: they deposit and report the tax on Form 141, Schedule E, against their own PAN and give you Form 132. Any other buyer, including a company, firm or trust, or an individual or HUF who is not resident, still needs a TAN and still files Form 144. The rate is the same on both routes; only the paperwork moved. The details are on our page on the October 2026 TAN change.

Check the deduction is made against your PAN and, for joint owners, split by each owner's share. Credit deducted against the wrong PAN is the hardest thing to recover afterwards.

The fix for over-withholding is a certificate for lower deduction. You apply on Form 128 under Section 395 (formerly Form 13), online through TRACES, with the computation of your gain, the sale agreement, your purchase deed and cost evidence, and your PAN. The Assessing Officer issues a certificate stating the rate the buyer should deduct, which is set on your estimated tax rather than the whole price.

Timing is the part that goes wrong. A certificate only governs deductions made after it is issued, and the deduction point is when the buyer credits or pays you, whichever comes first. So it must be in the buyer's hands before the first credit or payment, including any advance paid at the agreement stage. No turnaround is guaranteed, so we start the application as soon as the price and buyer are fixed, usually at the agreement-to-sell stage, and we ask for the registration date to leave room for it. Once a payment has been credited or made with tax deducted at the full rate, the certificate cannot reach back to it, and the remedy is the refund through your return.

The certificate is specific to the transaction and states its own validity and amount. If the buyer, price or schedule changes, it may need to be revised.

Your long-term gain is the full value of consideration, less the cost of transfer (brokerage, legal fees), less your cost of acquisition and the cost of any improvements. Stamp duty and registration paid on the purchase are part of your cost.

Three rules change the number for a non-resident:

No indexation. For transfers on or after 23 July 2024 the rate is 12.5 per cent on the unindexed gain. Resident individuals and HUFs selling land or buildings bought before that date may compare it with 20 per cent on the indexed gain and pay the lower. That option is not open to a non-resident, so your cost is not inflated for the years you held it.

No currency relief. The rule that lets non-residents compute gains in foreign currency applies to shares and debentures of an Indian company bought in foreign exchange, not to property. A weaker rupee since you bought does not reduce the gain.

The circle rate. If the stamp-duty value exceeds 110 per cent of the sale price, the stamp-duty value replaces the price in your computation, under Section 78 (formerly Section 50C). For property bought before 1 April 2001, the fair market value on that date can replace cost, capped at the stamp-duty value on that date where that value is available.

There is also no basic exemption set-off for a non-resident against this gain, so the first rupee of gain is taxed.

Your status as an NRI is tested afresh for the year of the sale, and a large gain can change it.

Days in India. You are resident if you spend 182 days or more in India in the financial year. A second test applies at 60 days in the year plus 365 days over the four previous years. The 60 days becomes 182 for an Indian citizen in the year they leave India for employment abroad, and for an Indian citizen or person of Indian origin visiting India. For a visitor whose total income, other than from foreign sources, exceeds Rs 15 lakh, it is 120 days, still with 365 days in the previous four years. The capital gain counts toward that Rs 15 lakh, so a long trip home to close the sale can cost you your NRI status.

Deemed residence. Under Section 6(7), formerly Section 6(1A), an Indian citizen whose total income, other than from foreign sources, exceeds Rs 15 lakh and who is not liable to tax in any other country by reason of domicile, residence or similar criteria is deemed resident, and is treated as not ordinarily resident. A UAE resident pays no UAE income tax, so this question is live for anyone whose gain crosses Rs 15 lakh. It changes the computation and the return, so we settle it before the deal is priced, not after.

The UAE side of residence. A UAE Golden Visa does not by itself make you a UAE tax resident. For the treaty, the India-UAE agreement counts you as UAE resident only if you were present there at least 183 days in the calendar year. That matters for your NRO interest and dividends rather than for the property gain, but it is the same certificate, so we check it at the same time. See the UAE TRC and the 183-day rule.

If you are planning a permanent move back to India, the year of sale also interacts with RNOR status. Selling while still non-resident, or in an RNOR year, gives different results, and the order of events is worth planning.

Two reliefs are used most by sellers living abroad.

Section 82, formerly Section 54. Where what you are selling is a long-term residential house, and you buy another residential house in India within one year before or two years after the sale, or construct one within three years, the gain reinvested is exempt, up to Rs 10 crore. The new house must be in India; a home in Dubai does not qualify. If the return is due before you have bought, the unused amount has to be deposited in a Capital Gains Account Scheme account before you file, and no later than the return due date, or the exemption is lost, and selling the new house within three years reverses it.

Section 85, formerly Section 54EC. Up to Rs 50 lakh of the gain placed in specified bonds within six months of the sale is exempt, with a five-year lock-in. The Rs 50 lakh is a single ceiling across the year of sale and the next, not Rs 50 lakh in each. Whether a particular bond issue admits non-resident investors is set by its own terms, so we confirm that before the six months run.

Both reliefs are claimed in your return, but they also feed the Form 128 computation, so planning them early reduces the withholding itself, not just the final tax.

Arjun works in Dubai. He bought a flat in Pune in March 2014 for Rs 60,00,000 and paid Rs 4,00,000 in stamp duty and registration. In December 2026 he sells it to a resident individual for Rs 1,30,00,000, which is AED 500,000 at an assumed AED 1 = Rs 26. Brokerage is 1 per cent. The stamp-duty value is not above the price, he has no other Indian income, and his days in India and Section 6(7) position have been checked and keep him non-resident.

Without a certificate, the buyer withholds on the full price, in the above-Rs-1-crore band: 12.5% of 1,30,00,000 is 16,25,000, plus 15% surcharge of 2,43,750, plus 4% cess of 74,750, a total of Rs 19,43,500 (AED 74,750). That is Rs 10,18,290, about AED 39,165, more than Arjun owes, held until his return for 2026-27 is filed and processed.

With a Form 128 certificate set at his computed tax, the buyer deducts about 7.12 per cent of the price, Rs 9,25,210, and the Rs 10,18,290 never leaves his hands. The rate is the Assessing Officer's to fix, so the figure on a real certificate can differ.

With Section 85 bonds. If Arjun places Rs 50,00,000 in qualifying bonds within six months, his taxable gain falls to Rs 14,70,000. Tax at 12.5% is 1,83,750, no surcharge applies below Rs 50 lakh, and cess is 7,350, a total of Rs 1,91,100 (AED 7,350).

Getting it to Dubai. On the certificate route his NRO account receives 1,30,00,000 less 1,30,000 brokerage less 9,25,210 tax, Rs 1,19,44,790, about AED 459,415. That is well inside the USD 1 million a year limit, so it can be remitted in one financial year.

Sale proceeds are paid into your NRO account. From there, a non-resident can remit up to USD 1 million per financial year, per person, covering the sale proceeds together with other NRO balances. Joint owners each have their own limit. Anything above it waits for the next financial year.

The bank needs Form 145 (formerly Form 15CA), your online declaration of the remittance. Where the amount is chargeable to tax and above Rs 5 lakh in the year, that usually comes with Form 146 (formerly Form 15CB), a certificate from a Chartered Accountant that the tax on the money has been dealt with. If you hold a certificate or order from the Assessing Officer for the payment, the declaration goes in Part B instead, without Form 146. Expect the bank to ask for the sale deed, the TDS certificate and proof the tax was deposited.

If you originally bought the property with money remitted from abroad or from your NRE or FCNR account, the sale proceeds of up to two residential properties can be repatriated under the property route rather than the USD 1 million NRO facility. That needs the original remittance trail, so dig out the purchase-era bank records before the sale. An inherited property does not use that route; it goes through the USD 1 million limit.