Bought in 1979, Selling in 2025: The Capital Gains Tax for NRIs

You purchased a plot with a flat in India in 1979, while being a non-resident of India. You’ve now decided to sell it. Since this is an asset situated in India, your gain on sale is taxable in India. Because you’ve held the property for decades, it qualifies as a long-term capital asset (since the holding period is far in excess of 24 months).

Cost of Acquisition – Pre-2001 Rule Applies

Since the property was acquired in 1979 (well before 1 April 2001), the law allows you to compute cost of acquisition as whichever is higher: your actual purchase price, or the fair market value (FMV) as on 1 April 2001, subject to the stamp duty value (SDV) as on 1 April 2001. That means you benefit by using the higher of these two.

Indexation Benefit Withdrawn for NRIs

Under the old regime (for transfers ‎before 23 July 2024) long-term capital gains (LTCG) from property were taxed at 20% with indexation benefit (adjusting the cost for inflation).
But as per the Finance (No. 2) Act, 2024 (and related amendments) for non-residents selling property on or after 23 July 2024, indexation benefit is not available, and a lower tax rate of 12.5% (plus surcharge/cess) applies.
Resident individuals and HUFs who acquired before 23 July 2024 have an option (choose 20% with indexation or 12.5% without) but that option is not available to NRIs.

How Your Taxable Gain Will Be Computed

Given you’re a non-resident and selling now (assumed on or after 23 July 2024), the computation will be:

• Sale Consideration (less any transfer expenses)
• Less: Cost of Acquisition (by the rule above)
• Less: Cost of Improvement (if any)
• The result = Long-Term Capital Gain (LTCG)
• Tax at 12.5% + surcharge + cess

There’s no indexation for you under the law as NRI.

Example (Illustrative)

Suppose:

• Purchase in 1979 at ₹ 1 lakh
• FMV on 1 April 2001 = ₹ 10 lakh
• SDV on 1 April 2001 = ₹ 11 lakh
  -> You pick ₹ 10 lakh as cost of acquisition (higher of 1 lakh or 10 lakh, still ≤ SDV)
• You sell in 2025 at ₹ 1.20 crore
• Transfer expenses ₹ 2 lakh
  -> Net sale ₹ 1.18 crore
  -> LTCG = ₹ 1.18 crore − ₹ 10 lakh = ₹ 1.08 crore
  -> Tax at 12.5% ≈ ₹ 13.5 lakh (+ surcharge + cess)

Key Practical Points

• Ensure you determine correct cost of acquisition (actual purchase vs FMV-2001) and have documentation.
• Check whether any cost of improvement or transfer expenses exist and are documented.
• The date of transfer/sale is critical – after 23 July 2024 triggers the 12.5% regime without indexation.
• The buyer must deduct TDS under Section 195 at the appropriate rate.
• If you reinvest and look for exemptions under Sections 54/54F/54EC, check NRI eligibility and conditions.

Summary

Because you’re an NRI, property bought in 1979, selling now: you cannot apply indexation. Cost will be actual purchase price or FMV‐2001 (whichever higher and ≤ SDV-2001). LTCG will be taxed at 12.5% (plus surcharge & cess) if sale is on/after 23 July 2024.

✅ Verified.RealEstate’s Take

For NRIs selling long-held properties, Verified.RealEstate simplifies the entire process — from property verification, buyer coordination, and escrow handling to legal documentation and sale execution. Their NRI property management service also covers maintenance, compliance, and remote oversight until sale completion.

They assist in gathering documents like the 1979 purchase deed and 2001 FMV records, ensuring the sale and tax calculation (LTCG at 12.5%) are accurate and compliant. While Verified.RealEstate handles the real-estate side — due diligence, marketing, and secure transfer — NRIs must still consult tax professionals for return filing and exemption claims under Sections 54/54EC.

Sections 54, 54F, and 54EC of the Income Tax Act allow you to reduce or avoid capital gains tax if you reinvest your sale proceeds —
54 / 54F: by buying within 2 years or constructing a new residential property within 3 years,
54EC: by investing in specified government bonds (like NHAI or REC) within 6 months of sale.