NRI Holding Property in India: Taxation, TDS, NRE/NRO Rules & ITR Filing Guide (AY 2026–27 Onwards)

 By CA Surekha Ahuja

The Definitive Legal & Tax Architecture for Global Indians Owning Property in India

Why This Guide Matters (AY 2026–27 onwards)

For AY 2026–27 and beyond, NRI property taxation in India is no longer just about “tax rules” — it has become a structured compliance ecosystem under the Income Tax Act, 2025.

We now operate in a framework where:

• Capital gains are taxed under a recalibrated concessional regime (12.5% LTCG)
• TDS on NRI transactions operates as a cash-flow control mechanism (Section 393)
• Bank remittance is governed by document-driven FEMA clearance (Forms 145/146)
• Reporting flows are integrated into PAN-based systems (Form 141 + AIS/Form 168)
• And planning tools like Form 128 (lower TDS certificate) determine liquidity efficiency

In simple terms:

India does not just tax your property anymore — it tracks, withholds, validates, and then allows movement of your money through a compliance pipeline.

Residential Status & Tax Exposure – The Foundation Layer

An NRI is not taxed on global income in India — but India always retains taxing rights over India-situated assets.

If you own property in India:

• Rent = “Income from House Property”
• Sale = “Capital Gains”
• Inheritance → taxed only at transfer stage (not acquisition)

 Core Principle

Whether you live in Dubai or Toronto — the moment your property generates income in India, India becomes the first taxing jurisdiction in the chain.

NRE vs NRO – Where Property Money Must Flow

NRO Account (Default Route)

• Rent credited here
• Sale proceeds credited here
• Subject to Indian tax deduction (TDS)
• Remittance allowed after compliance

NRE Account (Restricted Route)

• Clean foreign income only
• Limited eligible inward transfers
• Not a default parking account for property sale proceeds

Thumb Rule

Indian property money enters through NRO and exits through compliance — not shortcuts.

Taxation of Rent & Sale – Core Computation Logic

A. Rent from Property

Taxed under “House Property”:

• Gross rent
• Less: 30% standard deduction
• Less: interest on home loan (if any)

TDS on Rent (NRI landlord)

• Typically 30% + surcharge + cess
• Deducted by tenant (resident or business payer)

Reality Check

30% TDS is not 30% tax — it is an advance blockade, not the final liability.

B. Sale of Property

Holding Period Rule:

• ≥ 24 months → Long-Term Capital Gain (LTCG)
• < 24 months → Short-Term Capital Gain (STCG)

Tax Rates (AY 2026–27 onwards):

• LTCG: 12.5% + surcharge (capped at 15%) + 4% cess
• STCG: Slab rates (often 30% + surcharge + cess)

Exemptions on Capital Gains (Renumbered Framework)

Under Income Tax Act, 2025:

Section 123 (Old 54)

Reinvestment in residential property
→ Cap: ₹10 crore

Section 124 (Old 54F)

Reinvestment of capital gains into residential house
→ Cap: ₹10 crore

Section 125 (Old 54EC)

Investment in specified bonds (NHAI/REC etc.)
→ Cap: ₹50 lakh within 6 months

Planning Insight

You don’t reduce tax by calculation alone — you reduce it by reinvestment structure.

The Real Control System – TDS on NRI Property Sale (Section 393)

This is the most critical compliance layer.

Core Rule

Buyer must deduct TDS on entire sale consideration, not just gain.

This applies even if:

• Sale value < ₹50 lakh
• Property is jointly owned
• Partial payments are made

Typical TDS Structure

LTCG Property:

• 12.5% + surcharge + cess

STCG Property:

• Up to 30% + surcharge + cess

Reality Impact

On a ₹2 crore sale, TDS may exceed ₹30–40 lakh even when actual tax liability is much lower.

Form 128 – Lower / Nil TDS Certificate (Liquidity Optimisation Tool)

This is the most underused but most powerful tool for NRIs.

Purpose:

To align TDS with actual tax liability instead of gross sale value

Requirements:

• PAN & residential status proof
• Property documents
• Cost of acquisition + improvement
• Capital gain computation
• Proposed exemptions (123/124/125)
• Buyer details

Outcome:

Tax officer issues certificate → buyer deducts reduced TDS

Strategic Insight

Form 128 is not a compliance step — it is a liquidity management instrument.

PAN-Based System (Form 141) vs TAN Route

From AY 2026–27 onwards:

Form 141 (PAN-based mechanism)

• Unified challan + statement system
• Captures property TDS under Schedule B
• Auto-generates TDS credit in AIS (Form 168)

TAN Route (Traditional system)

• Used by companies, firms, large deductors
• Quarterly returns (Form 144 equivalent structure)

Key Reform Message

India is gradually shifting property TDS from TAN-driven compliance to PAN-driven transparency.

Repatriation System – NRO → Bank Approval → Foreign Transfer

Sale proceeds cannot freely exit India.

Mandatory Chain:

1. Credit to NRO account
2. Tax computation + TDS reconciliation
3. CA certification (Form 146)
4. Remitter declaration (Form 145)
5. Bank approval under FEMA
6. Repatriation (up to USD 1 million/year)

Core Principle

You don’t transfer money out of India — you prove eligibility to take it out.

Rent From Property – Tax Reality Check

Even when TDS is 30%, final tax may be much lower:

• 30% standard deduction
• Interest deduction (if loan exists)
• Refund possible through ITR filing

 Myth vs Reality

High TDS on rent does not mean high tax — it means forced advance collection.

ITR Filing (AY 2026–27) – The Final Settlement Layer

Filing is mandatory if:

• Property is sold
• Rent is earned
• TDS is deducted
• Repatriation is made

Must-report schedules:

• House Property Income
• Capital Gains (LTCG/STCG)
• Exemptions (123/124/125)
• TDS credits (Form 141 / AIS Form 168)

Critical Insight

TDS is not taxation. ITR is the final computation authority.

DTAA – The Final Layer of Relief (Not Replacement)

DTAA does NOT eliminate Indian tax.

It only ensures:

• No double taxation
• Foreign tax credit in country of residence
• Relief via TRC + Form 10F

Sequence:

1. India taxes income
2. India issues credit
3. Foreign country grants relief

Key Structural Flow (Master Compliance Chain)

Think of it as a pipeline:

Property Income → TDS (393/Form 141) → NRO Account → Form 128 (optional optimisation) → Forms 145/146 (remittance) → ITR Filing → DTAA Credit Abroad

Critical Mistakes NRIs Make

• Assuming 1% TDS applies (wrong for NRIs)
• Not filing ITR after sale
• Using NRE for property proceeds incorrectly
• Ignoring Form 128 eligibility
• Not reconciling AIS/Form 168
• Treating DTAA as tax exemption (it is not)

FINAL KEY TAKEAWAYS

If you own property in India as an NRI:

• Taxation is inevitable
• Planning determines liquidity
• TDS is a cash-flow control system, not final tax
• NRO is default holding account
• Form 128 determines how much cash gets blocked
• Form 141 governs transparency
• ITR is the final legal closure
• DTAA is post-tax relief, not pre-tax exemption

Closing Thought

Indian property for NRIs is no longer a passive asset — it is a regulated financial corridor where tax, banking, and reporting move in sync.
Those who understand the sequence don’t just comply — they optimise.

 

 

Form 15CA and Form 15CB Replaced — Complete Guide to Form 145 and Form 146 Under the Income Tax Act 2025

 By CA Surekha Ahuja

From 1 April 2026, every Indian company or individual making a payment to a non-resident must use Form 145 instead of Form 15CA, and every Chartered Accountant certifying such payments must issue Form 146 instead of Form 15CB. The numbers changed. The obligations didn't. But UDIN is now mandatory, the exempt categories list grew, and the filing sequence is stricter. Here is everything you need to know.

What replaced what — the full picture

Until 31 Mar 2026

Remitter declarationForm 15CA

CA certificateForm 15CB

Section195(6), Act 1961

RuleRule 37BB

Exempt categories28

UDIN on CA certNot mandatory

CA cert threshold₹5 lakh

From 1 Apr 2026 Form 145

ReplacesForm 15CA

Filed byIndian payer / remitter

SectionSec 397(3)(d), Act 2025

RuleRule 220

Filing basisPer transaction, before each remittance

Exempt categories33 (5 new added)

PartsA, B, C, D

From 1 Apr 2026 Form 146

ReplacesForm 15CB

Filed byChartered Accountant only

SectionSec 397(3)(d), Act 2025

RuleRule 220

When requiredTaxable remittance >₹5L, no AO cert

UDINNow mandatory on every Form 146

Can be withdrawn?Yes — within 7 days

How Form 145 and Form 146 work together — the mandatory sequence

For a taxable remittance above ₹5 lakh — this sequence is non-negotiable

Step 1

Non-resident

File Form 41 + TRC

Establishes DTAA eligibility. Generates ARN. Payer cannot apply treaty rate without this ARN.

Step 2

Indian payer

Assign Form 146 to CA

Log in → My Account → Add CA → enter CA's membership number → assign Form 146.

Step 3

Chartered Accountant

File Form 146 with UDIN + DSC

CA certifies income nature, TDS rate, DTAA article. Generates acknowledgement number. UDIN is mandatory.

Step 4

Indian payer

File Form 145 Part C

Links Form 146 ARN. Declares remittance details and DTAA rate to tax department. e-Verify via DSC or EVC.

Step 5

Bank (AD)

Process remittance

Bank requires Form 145 acknowledgement + Form 146 + A2 form + supporting docs. 1–3 working days.

Form 145 — the four parts explained

A

Part A

Taxable remittances where aggregate does not exceed ₹5 lakh in the tax year.

No CA certificate needed. Simpler declaration by remitter.

No Form 146 needed

B

Part B

Taxable remittances exceeding ₹5 lakh where an Assessing Officer certificate (Form 128) has been obtained specifying the TDS rate.

Needs Form 128 — not Form 146

C

Part C

Taxable remittances exceeding ₹5 lakh with no AO certificate. Most common scenario for business payments.

Form 146 must be filed by CA first. Remitter links Form 146 ARN here.

Requires Form 146 ARN first

D

Part D

Remittances that are not taxable in India — no TDS, no CA certificate.

Simple declaration that the payment falls outside Indian tax scope.

No Form 146 needed

Form 146 — what the CA certifies and what's new

The biggest change from Form 15CB: UDIN is now mandatory on every Form 146. UDIN is an 18-digit alphanumeric number generated on the ICAI portal that makes every CA certificate tamper-proof and verifiable in real time. A Form 146 without a valid UDIN is considered invalid — the remitter cannot use it to file Form 145 Part C, and the bank will not process the remittance. CAs must generate the UDIN on the ICAI portal before or at the time of filing.

Form 146 also now requires the CA's PAN and firm registration number. Once a Form 146 is used by the remitter in Part C of Form 145, it is marked "consumed" and cannot be reused. It can be withdrawn within 7 days if filed in error — but withdrawal automatically updates the linked Form 145 Part C status to "Withdrawn."

Step-by-step filing procedure

Filing Form 145 — Parts A, B, D (no CA certificate)

Step 1

Log in

PAN + password at incometax.gov.in

Step 2

Navigate to form

e-File → Income Tax Forms → File Income Tax Forms → Act 2025 tab → Form 145

Step 3

Select Part

Choose A, B, or D based on taxability and amount. Fill remitter, remittee, amount, purpose, TDS details.

Step 4

Preview, e-Verify, submit

DSC or EVC. Download acknowledgement. Submit to bank with A2 form.

Filing Form 145 Part C — with CA certificate (Form 146)

Step 1 — Indian payer

Assign Form 146 to CA

My Account → Add CA → enter membership number → assign Form 146 to the transaction

Step 2 — CA

File Form 146 with UDIN

CA logs in → generates UDIN on ICAI portal → files Form 146 with DSC → provides acknowledgement number to remitter

Step 3 — Indian payer

File Form 145 Part C

Enter Form 146 acknowledgement number → fill remittance details → preview → e-Verify (DSC or EVC) → submit → give acknowledgement to bank

Exempt remittances — when Form 145 is not needed

Rule 220(3) lists 33 categories of exempt remittances — up from 28 under the old Rule 37BB. Five new import-related RBI purpose codes have been added that were previously grey areas. Common examples of typically exempt remittances include: payment for imports of goods, travel expenses, education remittances, medical treatment abroad, maintenance of close relatives, and subscription fees for international publications. Always verify the current Rule 220(3) list before assuming an exemption applies — assumptions can be costly.

Transition rule — old forms already filed

Form 15CA/15CB filed before 31 March 2026 remain valid provided the actual remittance occurred on or before the date specified in those forms. If the remittance was not completed within that window, fresh Form 145 and Form 146 must be filed.

Accrual in old year, remittance in new year: If income accrued in February 2026 but remittance happens in April 2026 — the reporting format follows the law in force on the date of remittance (Form 145/146 under Act 2025). But the taxability and rate are governed by the Act applicable to the year of accrual (Act 1961). Two different Acts applying to one transaction — confirm with your CA before processing.

Decision table — which form do you need?

Situation	Form required	Filed by	Timing
Taxable remittance ≤₹5L in the year	Form 145 Part A	Indian payer	Before each remittance
Taxable remittance >₹5L — AO rate certificate obtained	Form 145 Part B	Indian payer	Before each remittance · attach Form 128
Taxable remittance >₹5L — no AO certificate	Form 146 first then Form 145 Part C	CA files 146 · payer files 145	CA files 146 → payer uses ARN in Part C → before remittance
Remittance not taxable in India	Form 145 Part D	Indian payer	Before each remittance
Remittance falls under Rule 220(3) exempt list	No form needed	—	Verify exemption applies first
Non-resident wants DTAA lower rate	Form 41 + TRC — non-resident files annually	Non-resident	Once per tax year · before ARN is shared with payer

Penalties for non-compliance

Default	Liable party	Consequence	Severity
Form 145 not filed before remittance	Indian payer	Penalty up to ₹1 lakh under Section 462. Bank will refuse to process remittance — transaction blocked.	Critical
Inaccurate information in Form 145	Indian payer	Penalty up to ₹1 lakh under Section 462	Critical
Form 146 filed without UDIN	CA	Certificate considered invalid. Form 145 Part C cannot proceed. Remittance blocked.	Critical
Incorrect information in Form 146	CA	Penalty up to ₹10,000 per certificate	High
TDS not deducted or short deducted	Indian payer	Assessee-in-default. 1% per month interest + penalty equal to TDS amount + 100% expense disallowance	Critical
Form 145 and Form 146 data mismatch	Indian payer	Selected for AO verification. Risk of demand, interest, and scrutiny.	High

Common errors — click to expand fix

CriticalWarningCompliance

1

Form 146 filed without UDIN — certificate invalid

CA submits Form 146 but UDIN was not generated on the ICAI portal first. Entire certificate is void. Form 145 Part C cannot be linked to it. Remittance blocked.

CA filing

2

Form 145 Part C filed before Form 146 — wrong sequence

Indian payer tries to file Part C before the CA has filed Form 146. Portal will not accept Part C without a valid Form 146 acknowledgement number.

Payer filing

3

CA not registered on e-filing portal / no DSC registered

CA cannot file Form 146 without being registered on incometax.gov.in and having a valid DSC registered. Form 146 can only be submitted via CA's DSC — no EVC alternative.

CA filing

4

Wrong Part selected in Form 145

Remitter selects Part A for a remittance that exceeds ₹5 lakh — or selects Part C unnecessarily for a non-taxable payment. Wrong part cannot be changed after submission.

Payer filing

5

Form 145 and Form 146 data mismatch — triggers AO scrutiny

Inconsistencies between remittance amount, date, or DTAA details in Form 145 and Form 146 flag the transaction in the ITBA system. Common cause: exchange-rate differences between filing date and remittance date.

Compliance

6

Bank refuses to process remittance — Form 145 acknowledgement missing

Authorised Dealer (bank) requires Form 145 acknowledgement + Form 146 + A2 form before processing. Incomplete documentation package causes remittance to be held.

Bank processing

7

Assuming Form 145 is not needed — exempt category misidentified

Remitter assumes payment is exempt under Rule 220(3) without verifying the current 33-category list. Form 145 not filed. Bank may still process but tax department flags the transaction.

Compliance

8

Old Form 15CA / 15CB used for April 2026 onwards remittances

Finance teams continue using old form numbers after the transition. Forms 15CA and 15CB are not valid for any remittance made from 1 April 2026 onwards.

Compliance

Pre-filing checklist for Indian payers

Non-resident has filed Form 41 and shared ARN — confirm before any payment

Determined correct Part (A / B / C / D) based on taxability and amount

Verified payment is not in the Rule 220(3) exempt list before assuming no form needed

For Part C: CA assigned on portal and Form 146 filed with valid UDIN before starting Form 145

Form 146 acknowledgement number in hand before opening Part C

Remittance amount, date, and DTAA article consistent between Form 145 and Form 146

Form 145 e-verified via DSC or EVC — acknowledgement downloaded

Full documentation package ready for bank: Form 145 + Form 146 + A2 + invoice + TDS challan

TDS deducted at correct rate — DTAA rate only if Form 41 ARN received from non-resident

All records retained for 7 years for potential AO scrutiny

Also read: Form 41: Complete Guide for Non-Residents — Filing Procedure, Portal Errors, Fixes & TDS Consequences (2026) — covers the non-resident's obligation to file Form 41 and TRC before DTAA benefits can be claimed on any payment from India.