Selling Your Mumbai Flat From Abroad? Here's How Capital Gains Tax Really Works for NRIs in 2026

NRIs selling a Mumbai flat pay 12.5% capital gains tax without indexation, and buyers withhold TDS on the full price. How it works, with a worked example.

The Park, Worli: residential towers with landscaped podium gardens

When an NRI decides to sell a flat in Mumbai, the first number they think about is the price. The second, usually a few weeks later and with some alarm, is the tax. Let me walk you through it calmly, because once you understand the two separate pieces, it's far less frightening.

How is capital gains tax calculated when an NRI sells property in India?

The gain is simply your sale price minus your purchase cost (plus improvement costs and expenses on the sale). Then:

Held for more than 24 months: it's a long-term gain, taxed at 12.5% plus surcharge and cess, without indexation. This has applied to sales from 23 July 2024.
Held for 24 months or less: it's a short-term gain, taxed at your slab rate.

Here's the part that catches many NRIs out. For property bought before 23 July 2024, resident individuals can choose the older method, 20% with indexation, if it gives a lower tax. NRIs don't get that choice (Belong, Business Standard). So an NRI who has held a flat for many years pays tax on the full gain in rupees, with no adjustment for inflation.

Why does the buyer deduct so much tax?

This is the second piece, and it's about cash flow, not your final tax. When the seller is an NRI, the buyer must deduct TDS on the entire sale price, not just your gain.

A worked example, based on the one in Business Standard: you bought a flat in 2010 for ₹1 crore and sell it for ₹3 crore. Your gain is ₹2 crore. Tax at 12.5% is ₹25 lakh before surcharge and cess. But the buyer could withhold roughly ₹45 lakh as TDS on the full ₹3 crore. You'd get the extra back only after filing your Indian return.

The fix is a lower deduction certificate: apply to the tax department before the sale with a computation of your actual gain, and the buyer deducts at the certified rate instead.

The tax on your gain and the TDS on your sale price are two different numbers. Plan for both, and the second one stops being a shock.

Can I reduce capital gains tax on my Mumbai flat?

Buy another home in India. Reinvesting a long-term gain in a residential house in India, within the set time limits, can exempt it, up to a cap of ₹10 crore.
Specified bonds. Investing the gain in eligible capital gains bonds within six months can exempt up to ₹50 lakh.
Keep your paperwork. Purchase agreement, stamp duty receipts and improvement bills all reduce your taxable gain. Missing papers cost real money.

From April 2026, India's new Income-tax Act renumbered many sections, so your chartered accountant may quote different section numbers from older articles. The principles above are what matter.

How we help NRI sellers

We prepare the sale so the paperwork never slows you down. A Singapore-based owner sold two flats in Kanjurmarg East with us; his elderly father held the power of attorney, so we prepared every document in advance and the signing took about three hours. Another owner in London flew in to sell two Worli flats, and both were signed the same day. Read more in selling Mumbai property as an NRI, or see our NRI sales desk.

Piramal Mahalaxmi residential towers in South Mumbai — Check what your flat is worth with the free TND valuation tool, and estimate withholding on the TDS calculator.

Frequently asked questions

What is the capital gains tax rate for NRIs selling property in India in 2026?

12.5% plus surcharge and cess on long-term gains (property held over 24 months), without indexation. Short-term gains are taxed at slab rates.

Can NRIs use indexation on property bought before July 2024?

No. The option of 20% with indexation for property bought before 23 July 2024 is available only to resident individuals and HUFs.

How can an NRI reduce TDS when selling a flat?

By applying for a lower deduction certificate before the sale, based on the actual capital gain, so the buyer deducts less than the full rate on the sale price.

Related reading

Planning a sale? Let's work out your numbers together before you sign anything. Book a video call or WhatsApp +91 88504 51835.

Warmly,
Yanik

General information, not tax advice. Please work out your own position with a chartered accountant before you sell.

Own a flat in Mumbai while living abroad?

TND Listings manages, sells and helps you buy property across Mumbai, Navi Mumbai and Thane, with one point of contact.

Chat on WhatsApp More articles

TND LISTINGS

TND Listings is a professional real estate brokerage company serving buyers, sellers, NRIs and Private Institutes. At TND Listings, you are number one. We believe in integrity, commitment to excellence, a professional attitude, and personalised care.

→

f X Ig in