Selling ancestral property in Karnataka from abroad is one of the most complex property transactions an NRI faces. There is no single-step process , it involves succession law, FEMA compliance, capital gains tax, TDS obligations on the buyer, and finally, repatriation of proceeds. This guide walks you through each step.
Step 1: Establish Your Legal Title to the Property
Before you can sell, you must have clear legal title to the property. For inherited property, this means:
- If the property was inherited under a Will, the Will should be probated (for testamentary succession under certain religions/states, probate may be required).
- If there is no Will, the property passes under applicable succession law (Hindu Succession Act, Indian Succession Act for Christians/Parsis, etc.).
- A legal heir certificate or succession certificate from the competent court confirms your right to sell.
- If multiple heirs exist, all co-heirs must either jointly sign the sale deed or execute a release deed in your favour.
Our team handles partition and family settlement for NRI clients with inherited Karnataka properties.
Step 2: Update Revenue Records (Mutation)
The property must be mutated in your name (or the heirs' names) in both the BBMP Khata and the Revenue records before it can be sold. An unmutated inherited property is a common cause of delays in NRI property sales. See our guide on property mutation in Karnataka.
Step 3: Execute Power of Attorney for Indian Representative
Since you are abroad, you will likely need to authorise a trusted person in India to complete the transaction on your behalf. This requires a registered and notarised Power of Attorney that specifically authorises the sale of the property. The PoA must be:
- Executed at the Indian Consulate/Embassy in your country of residence, or notarised abroad and apostilled
- Adjudicated (stamped) and registered in India before use
- Specific , it must name the property and authorise the sale
Our Power of Attorney services cover NRI PoA preparation and registration.
Step 4: Tax Obligations , TDS on NRI Property Sales
When an NRI sells property in India, the buyer is legally required to deduct TDS (Tax Deducted at Source) before paying the sale consideration:
- For Long-Term Capital Gains (property held >24 months): TDS at 12.5% + surcharge + cess (approximately 20-23% effective)
- For Short-Term Capital Gains (property held ≤24 months): TDS at applicable income tax slab rate + surcharge + cess (can be as high as 30-35%)
- The buyer must deposit TDS with the Income Tax Department and issue Form 16A to the NRI seller
NRIs can apply to the Income Tax Department for a Lower Deduction Certificate under Section 197 if their actual tax liability is lower than the TDS rate.
Step 5: Capital Gains Tax and Exemptions
The NRI must file an income tax return in India for the year of sale and pay capital gains tax on the profit from the sale. However, exemptions are available:
- Section 54: Reinvest the proceeds in a residential property in India within 1 year (before) or 2 years (after) the sale , or construct within 3 years.
- Section 54EC: Invest capital gains in NHAI/RECL bonds within 6 months of sale (up to ₹50 lakhs).
- Section 54F: Available for non-residential assets sold; reinvest in a new residential property.
See our detailed guide on capital gains tax when NRI sells property in India , 2026 update.
Step 6: Repatriation of Sale Proceeds
NRIs can repatriate the net sale proceeds (after TDS and capital gains tax) to their overseas bank account, subject to FEMA (Foreign Exchange Management Act) rules:
- Proceeds can be repatriated through NRO/NRE accounts up to USD 1 million per financial year (with a CA certificate under Form 15CA/15CB)
- The property must have been acquired in compliance with FEMA (inherited property or property purchased when the person was resident in India or as an NRI with RBI-permitted funds)
Get Expert Help for NRI Property Sales
Selling inherited property from abroad involves legal, tax, and FEMA compliance aspects that are genuinely complex. Our NRI property advisory service in Bangalore covers end-to-end support , from title verification and mutation to PoA, sale execution, and tax filing coordination.