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Vietnam

Selling Indian property while you are a Vietnamese tax resident

India's tax on the gain is far larger than Vietnam's tax on the price, so the credit means India's 12.5% is what you pay.

You are selling a property in India, and you are a tax resident of Vietnam. Both countries tax property, so the worry is a double bill. In practice the outcome is simpler than it looks: India taxes the gain at a rate far higher than Vietnam's small tax on the sale price, so the credit for the India tax wipes out the Vietnamese charge, and India's tax is really the only cost. Here is how the two sides fit, and the Indian point to get right.
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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. Vietnam taxes a real-estate sale at 2% of the sale price. Because India's 12.5% of the gain is almost always much larger than Vietnam's 2% of the price, Vietnam's credit for the India tax removes the Vietnamese charge, so India's 12.5% is the real and only cost. As an NRI, note that you get no indexation and no grandfathering on the Indian gain, unlike a resident Indian seller, so the flat 12.5% applies whatever the age of the property.

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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 sale, plus surcharge and cess, not the small 1% that applies to a resident seller, so a lower-deduction certificate is worth getting and any excess is reclaimed by filing an Indian return.

The point NRIs get wrong: the choice residents have, 20% with indexation or 12.5% without, on property bought before 23 July 2024, is for resident individuals only. An NRI does not get it and pays the flat 12.5% without indexation, whatever the age of the property.

Vietnam's tax is smaller, so the credit clears it

Vietnam taxes a real-estate sale by an individual at 2% of the sale price. Note that this is 2% of the whole price, not of the gain, so it is charged on the full sale value. Even so, it is almost always far smaller than India's tax, because India charges 12.5% of your gain, and on a property that has risen in value the gain-based 12.5% comfortably exceeds 2% of the price.

Because India, as the country where the property sits, has the primary right to tax the gain, Vietnam gives a credit for the India tax against its own charge. Since the India tax is the larger of the two, that credit wipes out the Vietnamese 2% entirely, and Vietnam collects nothing extra. So the practical outcome is clean: India's 12.5% is the real and only cost of the sale, and the Vietnamese tax, while it technically applies, is fully relieved by the credit. A practising CA computes the Indian gain, gets the lower-deduction certificate so the buyer withholds on the real gain, and gives your Vietnamese accountant the India-tax-paid detail for the 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 support the Vietnamese credit

    We give your Vietnamese accountant the India-tax-paid detail so the credit removes the Vietnamese 2% charge.

  4. 4

    We keep the India side clean

    We file the Indian return and reconcile the TDS, so the whole sale is in order across both countries.

What to have ready

Documents you'll typically need

  • The original purchase deed and rupee cost
  • The sale agreement and the buyer's TDS
  • The property's value and holding period
  • Your PAN and Vietnamese 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
  • Vietnam taxes a real-estate sale at 2% of the sale price, with a credit for the India tax
  • India's 12.5% of the gain almost always exceeds Vietnam's 2% of the price, so the credit removes the Vietnamese charge
  • The 20%-with-indexation grandfathering is for resident Indians only; an NRI is locked into 12.5% without indexation

Frequently asked questions

Common questions

Both technically tax it, but India's 12.5% of the gain is far larger than Vietnam's 2% of the price, so Vietnam gives a credit for the India tax that wipes out its own charge. In practice India's 12.5% is the only real cost.

No. The choice of 20% with indexation or 12.5% without, for property bought before 23 July 2024, is for resident Indians only. An NRI is locked into the flat 12.5% without indexation.

On the whole sale price, not the gain. But because India taxes 12.5% of the gain and gives Vietnam's credit priority, the Vietnamese 2% is cleared by the credit, so it does not add to your cost.

Yes. The buyer deducts under Section 195 on the sale, 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.

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.

Long-term holding period: all other assets including immovable property

Right now: 24 months for ALL assets other than listed securities

Where it works differently

Unlisted shares transferred on or after 23 July 2024
24 months, down from 36.
Finance (No. 2) Act 2024 rationalised every non-listed asset to 24 months.
The asset was inherited
The previous owner's holding period is added.
Explanation 1(b) to s.2(42A), read with s.49(1).
The transfer is a slump sale under s.50B
The 36-month long-term line is retained, not the 24 months that applies elsewhere.
s.50B was not rationalised by the Finance (No. 2) Act 2024, so the 36-month line survives there alone.

Commonly got wrong

  • Unlisted shares are long-term after 36 months. True only for transfers up to 22 July 2024. It is 24 months from 23 July 2024.State the transfer date, then the period.
  • Debt mutual funds become long-term after 36 months. Specified mutual funds bought on or after 1 April 2023 are always short-term under s.50AA, regardless of holding period.Specified mutual funds bought on or after 1 April 2023 are always short-term under s.50AA.

Related

If this matched your situation, these go further

Indian interest and dividends when you are a Vietnamese tax residentIndian shares and mutual funds when you are a Vietnamese 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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