Taxation is a crucial aspect of NRI property investment in Chennai. Understanding the rules for TDS, rental income, capital gains, and repatriation ensures compliance and helps you maximise returns. This guide covers the key tax implications for NRIs at every stage of property ownership.
A simplified visual summary of how property taxation works for NRIs investing in Chennai.
Stamp Duty & Registration: NRIs pay the same stamp duty and registration charges as resident Indians when buying property in Chennai.
TDS on Property Purchase: If you buy property from another NRI, TDS is deducted at 20% on the sale value. For purchases from residents, TDS is usually 1% if the property value exceeds ₹50 lakh.
For more, see Legal & Regulatory Guide for NRIs.
Taxable in India: Rental income from property in India is taxable, regardless of your country of residence.
TDS Deduction: Tenants must deduct TDS at 30% before remitting rent to the NRI owner.
Tax Filing: NRIs must file an income tax return in India if their total income (including rent) exceeds the basic exemption limit.
For practical tips, read Ready to Increase Your Rental Income?.
Short-Term Capital Gains: If the property is sold within 2 years of purchase, gains are taxed as per the NRI’s income tax slab.
Long-Term Capital Gains: For sales after 2 years, gains are taxed at 20% with indexation benefits.
TDS on Sale: The buyer must deduct TDS at 20% (plus surcharge and cess) on long-term gains and 30% on short-term gains when buying from an NRI.
For more, see Repatriation & Inheritance Guide for NRIs.
Home Loan Interest: Deduction up to ₹2 lakh per year under Section 24(b).
Principal Repayment: Deduction up to ₹1.5 lakh under Section 80C.
Capital Gains Exemption: Invest gains in another property or specified bonds to claim exemption under Sections 54 and 54EC.
Learn more in our NRI Financial Guide: Funding, Banking & Home Loans.
India has DTAA with several countries, allowing NRIs to claim credit for taxes paid in India against their tax liability abroad. Consult a tax advisor for country-specific benefits.
For official details, visit Income Tax India.
NRIs can repatriate up to USD 1 million per financial year from the sale of property, provided taxes are paid and documents are in order.
Repatriation is allowed only for properties purchased using foreign funds through NRE/FCNR accounts.
See our Repatriation & Inheritance Guide for NRIs for the process.
NRIs must obtain a PAN card and file returns if their Indian income exceeds the exemption limit.
Returns can be filed online from abroad.
Maintain all transaction and tax payment records for compliance.
Not deducting TDS on rent or sale
Missing tax filing deadlines
Ignoring DTAA benefits
Failing to declare all Indian income
For more, read Home Buying Myths Busted: What Every Buyer Needs to Know.
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How to Avoid Defaulting on your Home Loan – A Simple Guide to Planning Your EMIs
For personalised support on tax and compliance for NRI property investment, contact DRA Homes. Our team ensures you stay compliant and maximise your returns in Chennai real estate.
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