The purpose of this page is to walk one fictional NRI property sale through both tax systems in order: the TDS withheld in India, the actual Indian capital gains tax, the UK recompute in sterling, the treaty credit that prevents double taxation, and the rules for bringing the money to the UK.
Ravi is fictional. He moved to London in 2015, is UK tax resident (and past the 4-year foreign income and gains window for new arrivers), and is selling the Mumbai flat he bought in 2012.
Information and guidance only. Not personal advice. Ravi is fictional and this page simplifies a genuinely complex cross-border transaction. Verify decisions with a qualified FCA-authorised adviser in the UK and a chartered accountant in India before acting.
The first surprise in every NRI property sale: TDS (tax deducted at source) is calculated on the entire sale consideration, not on the gain.
Because Ravi is a non-resident seller, his buyer must withhold tax at the long-term rate of 12.5%, plus surcharge and cess, on the whole ₹3.0 crore. The actual tax he owes is computed on the gain. The difference comes back only by filing an Indian return and waiting for the refund.
| India side | Amount |
|---|---|
| Sale price | ₹3,00,00,000 |
| Purchase price (2012) | ₹80,00,000 |
| Long-term capital gain | ₹2,20,00,000 |
| LTCG tax at 12.5% (no indexation, post-July-2024 regime) | ₹27,50,000 |
| Plus surcharge (capped at 15% for capital gains) and 4% cess | ≈ ₹32,89,000 total |
| TDS withheld by the buyer on the full price (12.5% + surcharge + cess) | ≈ ₹44,85,000 |
| Refund due to Ravi after filing his Indian return | ≈ ₹11,96,000 |
Nearly ₹12 lakh of Ravi's money sits with the Indian tax department until his return is processed. A lower-deduction certificate obtained from the tax officer before completion can reduce the withholding to something closer to the real liability, which is why sequencing paperwork before the sale matters more than anything Ravi does after it.
As a UK resident, Ravi owes UK CGT on his worldwide gains. The UK does not translate the Indian gain; it computes its own, converting each leg at the exchange rate on its own date.
| UK side | Amount |
|---|---|
| Sale proceeds: ₹3.0 crore at ₹105/£ | £285,714 |
| Cost: ₹80 lakh at the 2012 rate of ₹85/£ | £94,118 |
| Sterling gain | £191,597 |
| Less CGT annual exempt amount | £3,000 |
| Taxable | £188,597 |
| UK CGT at 24% (higher-rate, residential property) | £45,263 |
Notice the currency effect: because the rupee weakened from ₹85 to ₹105 per pound over his holding period, the sterling gain (£191,597) is proportionally smaller than the rupee gain. Had the rupee strengthened instead, Ravi could owe meaningful UK tax on a currency gain even if the flat had barely appreciated in rupees. One more deadline: UK residential property CGT normally involves a 60-day report-and-pay window for UK property; for overseas property the gain goes through self-assessment instead.
The UK-India double taxation agreement lets Ravi credit Indian tax actually paid on the gain against his UK CGT on the same gain.
| Bringing the two together | Amount |
|---|---|
| UK CGT due | £45,263 |
| Indian tax actually paid (≈ ₹32,89,000 at ₹105/£) | ≈ £31,324 |
| Foreign tax credit | ≈ £31,324 |
| UK top-up Ravi still owes HMRC | ≈ £13,939 |
The credit is capped at the UK tax on the same gain, so when Indian tax is the higher of the two, no UK refund arises for the excess. The paperwork that makes the credit stick: a UK tax residency certificate on the Indian side, and evidence of the Indian tax actually paid on the UK side.
Sale proceeds land in Ravi's NRO account. NRO repatriation is capped at USD 1 million per financial year, with a chartered accountant's certification (Forms 15CA and 15CB) confirming Indian taxes are settled.
At ₹105/£, Ravi's net proceeds after Indian tax comfortably fit within one year's USD 1m limit, so for him the cap is paperwork rather than a constraint. For larger sales, the cap forces a multi-year repatriation plan, during which the remaining rupees carry FX risk and their interest is taxable in both countries (with treaty relief). None of this is automatic; the receiving UK bank will also ask about source of funds, so the sale file (agreement, tax proof, CA certificates) stays useful long after completion.
Methodology. India figures from bundle IN-2026.1.1: property LTCG 12.5% without indexation for sales in the post-23-July-2024 regime, 24-month long-term threshold, TDS on sale consideration for non-resident sellers at the LTCG rate plus surcharge (capped at 15% for capital gains) and 4% cess, NRO repatriation USD 1m per year with Forms 15CA/15CB. UK figures from bundle UK-2026.1.1 (2026/27): CGT annual exempt amount £3,000, residential property rates 18% / 24%, UK-India DTAA foreign tax credit. Exchange rates are illustrative round numbers, not market rates. All arithmetic machine-checked before publication. Published 7 August 2026 · figures last verified 7 August 2026.
Sonuswealth is pre-launch and built UK-India native. See the NRI page for what the app tracks across both systems.