Step by step process of Selling Property in India as an NRI

Let's walk through the entire procedure of selling property in India as a Non-Resident Indian (NRI). Whether it’s your first time selling property or you’re simply unfamiliar with the process while being abroad, this guide will help you navigate the steps involved.

Step-by-Step Approach to Selling Property

Step 1: Notify Your Agent

The first step is to inform your real estate agent or spread the word that you’re looking to sell your property. Once potential buyers show interest, you’ll need to visit your property to facilitate the next steps.

Step 2: Memorandum of Understanding (MoU)

Once a buyer is interested, you will sign a Memorandum of Understanding (MoU) on a 100 rupee stamp paper. Though not a legal document, it outlines the agreed price and payment terms. At this stage, the buyer typically provides a token amount ranging from 50,000 to 1 lakh rupees.

Step 3: Document Verification

After signing the MoU and receiving the token amount, you provide the buyer with copies of the property documents for legal verification. The buyer will have their bank or lawyer check the legalities of the property.

Step 4: Down Payment

Once the buyer is satisfied with the legal verification, they make a down payment, which is usually 10-20% of the property’s value. For instance, if your property is worth 1 crore, the down payment would be 10-20 lakhs.

Step 5: Agreement to Sell (ATS)

The next crucial document is the Agreement to Sell (ATS), which legally binds both parties. The buyer pays stamp duty on the full property amount (5-6%, depending on the state). This step ensures that neither party can back out.

Step 6: Final Disbursement

After the ATS is registered, the buyer submits their documents to the bank for the final disbursement of the remaining amount. This step involves the buyer’s bank disbursing the remaining 80-90% of the property value.

Step 7: Handing Over the Property

Once the final payment is received, you hand over the property and sign the Deed of Sale. This document finalizes the sale, confirming that all terms have been met and the property has been transferred to the buyer.

Important Considerations

Lower TDS Certificate

As an NRI, you are required to pay TDS (Tax Deducted at Source) on the sale of property, which can range from 23% to 29% of the total sale value. To avoid blocking this substantial amount for an extended period, you can apply for a Lower TDS Certificate (LTC). Here’s how:

1. Phase 1: Pre-Sale Preparation

- Transfer your PAN to the International Jurisdiction.

- Prepare the necessary documentation and computations.

2. Phase 2: Post-Buyer Identification

- Once you find a buyer, complete the LTC application.

- The buyer will need to apply for a TAN (Tax Deduction and Collection Account Number).

It’s crucial to accept only a small token amount (50,000 - 1 lakh rupees) before the LTC application, as you won’t get the benefit of lower TDS on larger amounts.

Coordinating with the Buyer and Bank

While the buyer’s loan application is being processed (typically 30-60 days), your LTC application will also be processed in parallel. This ensures that both processes are completed simultaneously, avoiding delays.

Filing the LTC Application

- Once you receive the acknowledgment of the LTC application, you can proceed with the Agreement to Sell.

- The buyer’s bank will withhold only the reduced TDS amount as specified in the LTC and disburse the remaining funds to your NRO account.

By following these steps, you can efficiently navigate the property selling process in India as an NRI.