NRI selling Indian assets? Where you reside matters

When selling Indian assets, be cautious of the potential tax implications linked to your country of residence.

Key points

• (Catch all the Personal Finance News, Breaking News, Budget 2025 Events and Latest News Updates on The Economic Times.).
• The UK's tax rules changed substantially from April 6, 2025.
• Selling an Indian property, shares, mutual funds or gold can typically result in capital gains tax in India.
• Therefore, a US tax resident selling an Indian property, shares or other investment may have to report the gain in the US as well.

When selling Indian assets, be cautious of the potential tax implications linked to your country of residence. Tax obligations can vary based on your residency timeline and applicable regulations. Read on to understand how your residency can impact your tax bill if you are an NRI in the US, UK, Canada, Australia, Singapore or UAE. Listen to this article in summarized format.

Selling an Indian property, shares, mutual funds or gold can typically result in capital gains tax in India. But for an NRI, paying tax in India may not necessarily be the end of the story. "Individuals assume that once they've paid capital gains tax in India, that's the end of it. It isn't – for most NRIs, India is only the first bill, " notes CA Priyal Goel Jain, Partner and NRI Tax Expert at Dinesh Aarjav & Associates. If you are a tax resident in another country, that country may additionally tax the gain under its own rules. This means an NRI living in the US could have a particularly different final income tax bill from someone selling the same Indian asset while living in the UAE.

So, where you live can matter almost as much as what you sell. NRI in the US: Indian gains can trigger US tax too.

"Worldwide income taxation applies the moment you're a citizen, green card holder, or meet the substantial presence test – an Indian gain doesn't quietly disappear just because it happened in India, " notes Sanyam Goel, Director, Accorp Partners. Therefore, a US tax resident selling an Indian property, shares or other investment may have to report the gain in the US as well. The tax paid in India can generally be considered for foreign tax credit purposes, subject to US rules. But this does not necessarily mean the Indian tax simply cancels out the US liability, notes Jain. "There's additionally a currency effect: as the rupee has weakened against most of these currencies over a typical holding period, the gain measured in dollars or pounds is often larger than the gain measured in rupees – and that's the figure taxed abroad, credit or not. Holding-period rules don't line up either: an asset can be long-term in India and short-term back home, or vice versa, " she adds. This can produce a different taxable gain in the NRI's country of residence. "Also worth budgeting for: the Net Investment Income Tax adds 3.8% on top of the federal capital gains rate once your income crosses roughly $200, 000 (single) or $250, 000 (joint) – thresholds that, unhelpfully, aren't indexed for inflation and quietly catch more people every year, " notes Goel. Notably, a US-based NRI should therefore calculate the gain and potential foreign tax credit under US rules before assuming that paying Indian tax settles the liability. NRI in the UK: The date you became UK resident matters.

Notably, the UK's tax rules changed substantially from April 6, 2025. "The UK tore up its centuries-old non-dom remittance basis entirely from 6 April 2025, replacing it with a residence-based Foreign Income and Gains regime, " explains Goel. NRIs who are UK tax residents need to determine which regime applies to them rather than relying on the old non-domicile rules. "If you've genuinely just arrived in the UK – not UK tax resident in any of the prior ten years – you get four years where foreign gains, an Indian property sale included, can come into the UK completely free of UK tax, " notes Goel. This makes the timing of an Indian asset sale particularly significant for someone moving to the UK. For individuals who were already UK residents, the treatment can be different. Goel additionally points to transitional provisions, including feasible rebasing for certain taxpayers who previously applied the remittance basis. An exemption or relief available under Indian tax law does not automatically mean the UK will provide the same relief, cautions Jain. Therefore, NRIs in the UK should establish their UK tax-residency date and applicable regime before selling a significant Indian asset. NRI in Canada: Your asset's value when you moved can matter.

Canada has a particularly significant rule for individuals becoming Canadian tax residents. "Under Section 128.1(1) of the Income Tax Act, the moment you become a Canadian tax resident, you're deemed to have sold and immediately reacquired most of your existing worldwide property at its fair market value on that date, " explains Goel. This means the value of an Indian property or investment at the time Canadian tax residency starts can become significant in calculating the eventual Canadian gain. For NRIs in such situations, Jain advises keeping detailed records of the asset's original purchase, improvements and value when residency changes. If the asset is sold plenty of years afterwards, these records can be critical. NRI in Australia: Keep a valuation when you become resident.

Australia additionally has specific rules for assets held before becoming an Australian tax resident. "Same practical advice as Canada: get a proper valuation as close as possible to your residency start date and keep it somewhere you can find it in ten years, " suggests Goel. For an NRI selling an Indian asset after becoming an Australian tax resident, the timing of the sale can matter since eligible assets held for more than 12 months may qualify for a 50% capital gains tax discount, subject to the applicable conditions. An NRI in Australia should establish the Australian tax cost base of major Indian investments at the appropriate time and preserve the supporting valuation. NRI in Singapore and UAE: Generally, no individual capital gains tax.

Meanwhile, the situation is considerably simpler for an NRI who is a tax resident of Singapore or UAE. The UAE and Singapore don't tax capital gains at all, so for residents there, India's tax is the entire bill, ' notes Jain. Therefore, an NRI selling an Indian investment will generally need to focus primarily on the Indian tax liability. Nevertheless, the nature of the transaction matters. If an activity is treated as business or trading income rather than a capital investment, the outcome can differ. But Jain stresses that this does not mean the transaction is tax-free. The Indian capital gains rules, TDS requirements and exemptions still apply. NRIs should focus on getting the Indian tax calculation and TDS position right before completing the sale. For an NRI, where you live can be as significant as what you sell. The exact outcome depends on the asset, the timing of the sale, the NRI's tax-residency history, currency movements and the rules of both countries. For a sizeable transaction, the right time to work out the tax bill is before the sale, not after the capital has been received.

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