POA Sales and NRI Tax Liability: Who Pays?

"My brother signed the sale deed on my behalf using the Power of Attorney I gave him — so does he pay the capital-gains tax, or do I?" This question, in some form, comes up constantly among NRIs who can't be physically present in India to execute a property sale themselves. It's a reasonable thing to be unsure about: someone else held the pen, someone else sat across the table from the buyer, someone else's name appears on the registration paperwork as the executant. Surely that means something for who owes the tax?

It doesn't — at least not for the tax liability itself. This article lays out precisely why, walks through where the capital-gains tax, the buyer's TDS obligation, and the reporting responsibility actually land, and flags the practical and fraud-related risks that come with using a POA for a cross-border sale. None of this is legal advice; for the specific POA drafted for your sale, involve a lawyer and a CA.

POA Is Agency, Not Ownership Transfer

A Power of Attorney is a legal instrument that authorizes someone (the "POA holder" or attorney) to act on your behalf for specified matters — signing documents, appearing before the sub-registrar, receiving payments, and so on. What it does not do is transfer ownership of the property, or transfer the tax obligations that attach to that ownership. The POA holder acts as your agent; you remain the principal, the legal owner, and — critically for tax purposes — the person in whose hands the capital gain arises.

This is a foundational distinction. The person who benefits economically from the sale (you, the NRI owner, receiving the sale proceeds) is the person who owes the capital-gains tax, irrespective of who physically signed the conveyance deed or appeared at the registrar's office. Indian tax law attaches liability to beneficial ownership of the asset and its transfer, not to who executed the paperwork as an agent.

Where the Gain, TDS, and Reporting Actually Land

Here's the practical flow for a POA-executed sale by an NRI:

1. Capital gain accrues to the NRI owner — computed on the difference between sale consideration and indexed/non-indexed cost of acquisition, exactly as it would if the NRI had signed in person.
2. The buyer deducts TDS under Section 195, based on the seller's NRI status — not the POA holder's residency status. Per ClearTax's guidance on TDS for NRI property sales, this results in an effective TDS rate of approximately 14.95% on long-term capital gains (computed from a 12.5% LTCG rate without indexation, or 20% with indexation, per current rules), deducted on the full sale consideration before proceeds reach the seller.
3. Sale proceeds should flow to the NRI's NRO account — not the POA holder's personal account. Funds landing in the POA holder's account instead of the NRI-owner's account doesn't change whose income it legally is, but it creates a paper trail that looks, to a bank or to the tax department, like the POA holder received the money — which is exactly the kind of ambiguity that invites scrutiny and complicates reconciliation.
4. The NRI owner reports the capital gain and TDS reconciliation in their own ITR, regardless of who executed the transaction.

The signature on the sale deed identifies who was authorized to convey the property on that day. It does not redefine who owned it, who profited from selling it, or who is answerable to the Income Tax Department for that profit.

Data Table: Role, Tax Role, and Obligation

Geographic/Demographic Specifics: NRO Flow, FEMA, and POA Verification

NRO account flow: Sale proceeds from an NRI-owned property should be credited to the NRI's NRO (Non-Resident Ordinary) account, from which repatriation is governed by RBI's FEMA rules (subject to documentation like Form 15CA/15CB and any applicable annual repatriation limits). Structuring the deal so proceeds land anywhere else — a POA holder's own account, for instance — muddies both the tax trail and the repatriation process later.

FEMA and property transactions: Per the RBI's FEMA FAQ on the purchase of immovable property, NRIs and OCIs can transact residential and commercial property in India (buy and sell) without needing specific RBI approval, subject to the well-known restriction on agricultural land, farmhouses, and plantation property. A POA does not change these underlying FEMA eligibility rules — it's simply a mechanism for executing an otherwise-eligible transaction while the owner is abroad.

POA verification practice in India: Sub-registrar offices in India generally require the POA to be properly executed, and in many cases notarized or apostilled/attested (depending on where it was executed abroad — an Indian consulate is often the relevant authority for POAs signed overseas) before it's accepted for a registration. Buyers, too, increasingly ask for the POA to be verified and sometimes for direct confirmation from the NRI owner before proceeding, given the well-documented history of property fraud involving forged or over-broad POAs in India.

Real-World Scenario: Selling a Delhi-NCR Flat via a Sibling's POA

An NRI based in the US owns a flat in Gurugram and cannot travel to India during the sale window. They execute a registered Power of Attorney in favor of their sibling in Delhi, specifically authorizing the sale of that one property, signing of the conveyance deed, and receipt of the token amount (with the balance sale consideration to be paid directly into the NRI's NRO account by the buyer).

The sibling negotiates the sale, signs the deed at the sub-registrar's office, and hands over possession. The buyer, aware the seller is an NRI, deducts TDS under Section 195 at the effective rate applicable to the NRI's capital gain (or applies for a lower-TDS certificate under Section 197 if the NRI has arranged one in advance, per ClearTax's guidance) and remits the balance to the NRI's NRO account. At tax filing time, the capital gain is computed and reported entirely under the NRI owner's PAN — the sibling's role never enters the tax computation, because the sibling never owned the asset or received its economic benefit.

This is the sale working as intended: the POA facilitated execution while the ownership, the gain, and the tax obligation stayed correctly attached to the NRI throughout.

Drafting a POA to Limit Misuse (Informational, Not Legal Advice)

Because a POA can be a powerful and, if drafted too broadly, risky instrument, NRIs commonly build in scope limits when working with their lawyer:

• Transaction-specific scope — authorizing the sale of one named, specifically identified property, rather than a general power over all the NRI's Indian assets.
• Time-bound validity — an expiry date after which the POA automatically lapses, rather than an open-ended authorization.
• Payment routing clause — explicitly directing that sale consideration be paid into the NRI-owner's own NRO account, not the POA holder's account.
• Revocation registered promptly once the transaction is complete, so the POA cannot be reused for anything beyond its original purpose.
• A registered (not merely notarized) POA where required, and attestation through the Indian consulate/embassy for POAs executed abroad, per the sub-registrar's requirements.

These are informational starting points; the actual drafting should go through a property lawyer familiar with the specific state's registration requirements, since practice varies.

Pro Tips

1. Route sale proceeds directly to your NRO account in the POA and sale agreement itself — don't rely on informal reimbursement from the POA holder after the fact.
2. Coordinate the TDS position (Section 195, and Section 197 for a lower-TDS certificate) before the sale closes, not after — this is significantly harder to fix retroactively.
3. Keep the POA narrowly scoped and time-bound, limited to the specific sale, and revoke it in writing once the transaction is registered.
4. Verify the POA at the sub-registrar and with the buyer's lawyer before the transaction proceeds, to reduce fraud risk on both sides.
5. Model the expected capital-gains and TDS position in advance, using DrawMagic's financial planning workspace, so there are no surprises about the net proceeds you'll actually receive.

Common Mistakes to Avoid

• Assuming the POA holder bears any tax liability for the sale — they don't; the gain and the obligation stay with the owner.
• Letting sale proceeds land in the POA holder's account instead of the NRI-owner's NRO account, creating unnecessary reconciliation and repatriation complications.
• Using an overly broad, open-ended POA covering all assets indefinitely, rather than a transaction-specific, time-bound one.
• Skipping advance TDS planning (e.g., a lower-TDS certificate application under Section 197 where eligible) and discovering the full TDS bite only after the sale closes.
• Not verifying the POA's authenticity and scope before relying on it for a high-value transaction — a well-documented source of property fraud in India.

Integration With Other DrawMagic Features

If you're an NRI planning a sale (or a purchase) that will involve a POA, DrawMagic's financial planning workspace can help you model the expected capital-gains position and net proceeds correctly attributed to you as the owner, ahead of the transaction. DrawMagic's help centre has practical guidance on organizing the POA, sale deed, and TDS documentation your CA and the buyer's counsel will ask for. If you're earlier in your India property journey — buying rather than selling — the buyer workspace and property tax calculator are useful starting points for understanding ongoing ownership costs before you commit.

Value Note: Getting Gain Attribution Right From the Start

The single most consequential thing to get right in a POA-executed NRI sale is making sure every downstream party — the buyer, the buyer's TDS deductor, the sub-registrar, and eventually the Income Tax Department — treats the transaction as a sale by the NRI owner, with the POA holder correctly identified only as the executing agent. Get that attribution wrong at the outset (proceeds to the wrong account, TDS computed on the wrong party's status) and it becomes a genuinely difficult and slow reconciliation exercise afterward. DrawMagic's financial planning tools are designed to help you plan the transaction correctly before it happens, not just report on it after.

Key Takeaways

• A Power of Attorney authorizes someone to act on your behalf; it does not transfer ownership or shift tax liability away from you.
• Capital-gains tax on a POA-executed sale is owed by the NRI owner, computed exactly as if they had signed in person.
• The buyer's TDS obligation under Section 195 is based on the seller's (NRI owner's) status, even when a POA holder signs — effective ~14.95% on LTCG, illustratively, per ClearTax's 2026 guidance.
• Sale proceeds should be routed directly to the NRI-owner's NRO account, not the POA holder's personal account.
• Per the RBI's FEMA FAQ, NRIs/OCIs can transact residential/commercial property without special RBI approval, subject to the standard agricultural/farmhouse/plantation restriction — a POA does not change this eligibility.
• Keep the POA transaction-specific, time-bound, and revoke it promptly once the sale is registered.
• Verify the POA's authenticity and scope with the sub-registrar and the buyer's counsel before proceeding, given documented fraud risk with overly broad POAs.
• None of this is legal advice — involve a property lawyer for POA drafting and a CA for the tax computation and filing.

FAQ

Q: Does my POA holder need to file anything with the tax department for the sale? A: Generally the capital gain and its reporting belong to the NRI owner's PAN and ITR, not the POA holder's, since the POA holder does not own the asset. Confirm the specifics with a CA, particularly around how the transaction is structured.

Q: Can the buyer refuse to complete the sale if they're worried about the POA's validity? A: Yes — buyers and their counsel routinely scrutinize POAs, especially foreign-executed ones, given fraud history in India; a properly registered, notarized/apostilled, and narrowly scoped POA reduces this friction significantly.

Q: What happens to the TDS rate if I get a lower-deduction certificate before the sale? A: Per ClearTax's guidance, NRI sellers can apply under Section 197 for a certificate authorizing a lower TDS rate based on actual computed capital gains, rather than the standard rate applied to the full sale consideration — but this needs to be arranged before the sale closes, not after.

Selling Indian property from abroad through a Power of Attorney doesn't change who owes the tax — it changes who's in the room. Model your expected capital-gains and TDS position in the financial planning workspace, lean on DrawMagic's help centre for the documentation checklist, and bring a lawyer and CA into the POA drafting before you sign anything.