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Income Tax September 2026

Buying Property from an NRI? No TAN Needed from 1 October 2026

By CA Ashish, Ashish Jayalata & Associates, Chartered Accountants, Ghaziabad | Published: 26 September 2026

If you are a resident individual or HUF buying a house, flat or plot from a non-resident, you no longer need a TAN to deduct and deposit TDS on the purchase price. For deductions made on or after 1 October 2026, you can pay the TDS using your own PAN through Form 141, much like buyers already do when the seller is a resident.

The tax itself has not changed. The NRI seller's TDS is still much higher than the 1% that applies to resident sellers, and the buyer remains responsible for deducting it correctly. What has changed is the paperwork.

At a Glance

Point Position
What changed TAN no longer required for TDS on property bought from a non-resident; TDS paid and reported through PAN-based Form 141 (new Schedule E)
Who benefits Resident individuals and Hindu undivided families (HUFs) only
Who does not Companies, firms, LLPs and other buyers — they still need TAN
Effective date 1 October 2026
Legal basis Section 397(1)(c) of the Income-tax Act, 2025 (amended by the Finance Act, 2026); Income-tax Rules amended by CBDT Notification No. 121/2026 dated 22 September 2026
TDS rate Unchanged — rates applicable to the NRI seller's capital gain, plus surcharge and 4% cess
Buyer's action Collect seller details (PAN, or TRC and foreign tax ID), deduct TDS, file Form 141 Schedule E, issue Form 132 to the seller

The Old Rule and the New Rule

The law now treats a buyer the same way for TAN purposes whether the seller is a resident or an NRI. Only the tax rate still depends on who the seller is.

Why a TAN was needed earlier

When the seller is a resident, the buyer deducts 1% TDS (where the consideration or stamp duty value is ₹50 lakh or more) and pays it through a PAN-based challan-cum-statement. No TAN is needed. Under the Income-tax Act, 2025, this is covered by section 393(1), and Form 141 replaced the old Form 26QB from 1 April 2026.

When the seller is a non-resident, TDS is deducted under section 393(2) (the successor to old section 195). Until 30 September 2026, that route had no PAN-based option. A salaried person buying one flat from an NRI had to apply for a TAN, deposit tax under it, file a quarterly TDS return for non-resident payments and issue a TDS certificate — all for a single transaction. The Finance Bill 2026 Memorandum describes this as an unnecessary compliance burden.

What the law now says

The Budget Speech 2026-27 (para 110) announced that TDS on the sale of immovable property by a non-resident would be deducted and deposited through the resident buyer's PAN-based challan instead of requiring TAN. The Finance Act, 2026 gave effect to this by amending section 397(1)(c) of the Income-tax Act, 2025. From 1 October 2026, a resident individual or HUF deducting tax under section 393(2) on consideration for transfer of immovable property is not required to obtain TAN.

CBDT then amended the Income-tax Rules through Notification No. 121/2026 (G.S.R. 830(E)) dated 22 September 2026, effective 1 October 2026. The notification:

  • amends rule 215 to cover the section 393(2) deduction by resident individuals and HUFs;
  • amends rules 218 and 219 so the Form 141 payment-and-statement route and the Form 132 certificate apply to these transactions;
  • inserts a new Schedule E in Form 141 for property bought from a non-resident;
  • adds a category in Form 132 for transfer of immovable property by a non-resident to a resident individual or HUF.

What has not changed

  • The rate. TDS is still deducted at the rate applicable to the NRI seller's income from the sale, not at 1%.
  • No ₹50 lakh threshold. The threshold applies only to resident sellers. For an NRI seller, TDS applies whatever the price.
  • Other buyers. Companies, firms, LLPs and trusts buying from an NRI still need a TAN and follow the regular non-resident TDS process.
  • The seller's own obligations. The NRI still files an Indian return, and needs bank documentation to repatriate sale proceeds.

Which transactions are covered

The relief is linked to the date of deduction. In our view, TDS deducted on or after 1 October 2026 goes through Form 141, while deductions made up to 30 September 2026 stay on the TAN route. Where a deal is paid in instalments across that date, earlier instalments stay under TAN and later ones may move to Form 141. Schedule E asks for earlier instalment details, but mixed cases should be handled carefully and with professional advice.

Example: TDS on a ₹1.2 Crore Flat Bought from an NRI

Ravi, a resident individual in Ghaziabad, agrees in November 2026 to buy a flat from Meera, an NRI living in Dubai. Meera bought the flat in 2018 for ₹80 lakh. The sale price is ₹1.2 crore, paid in one go. Meera has not obtained a lower deduction certificate.

Assumptions: the flat has been held for more than 24 months, so the gain is long-term; LTCG is taxed at 12.5% (the rate applicable to transfers on or after 23 July 2024); surcharge is 15% because the amount exceeds ₹1 crore (surcharge on LTCG is capped at 15%); health and education cess is 4%. Cost of improvement and transfer expenses are ignored.

Formula: TDS = Sale consideration × 12.5% × 1.15 (surcharge) × 1.04 (cess)

Step Amount (₹)
Sale consideration 1,20,00,000
Tax at 12.5% 15,00,000
Add surcharge at 15% 17,25,000
Add cess at 4% — TDS to deduct 17,94,000

Without a certificate, Ravi deducts ₹17,94,000 (an effective 14.95%) and pays Meera ₹1,02,06,000. From 1 October 2026 he deposits it with his PAN through Form 141 Schedule E; before that date he would have needed a TAN.

Why a lower deduction certificate matters

Meera's actual gain is about ₹40 lakh (₹1.2 crore less ₹80 lakh). Tax on that at the same effective rate is about ₹5,98,000. Without a certificate, roughly ₹11,96,000 more is withheld and Meera must claim it back as a refund. A certificate under section 395 of the Income-tax Act, 2025, obtained before payment, lets Ravi deduct at the lower rate stated in it.

Illustrative only. Actual surcharge, holding period and gain depend on the facts. Short-term gains attract higher rates.

Buyer's Compliance Checklist

  1. Confirm the seller's residential status in writing before signing. If the seller is an NRI, the 1% rule does not apply.
  2. Collect seller details for Schedule E: PAN, or if the seller has no PAN, the Tax Residency Certificate, foreign Tax Identification Number, overseas address, email and phone. These details help avoid deduction at a higher rate.
  3. Ask whether the seller has a lower or nil deduction certificate under section 395. If yes, check its validity, amount and your name as the payer, and deduct at the certified rate.
  4. Work out the TDS on each payment (advance, instalment or final), including surcharge and 4% cess.
  5. Deduct at the time of payment or credit, whichever is earlier, and pay the seller the net amount.
  6. File Form 141 with Schedule E using your PAN. Joint buyers each file their own form for their share.
  7. Deposit on time. Under the Form 141 framework, the challan-cum-statement is due within 30 days from the end of the month in which tax is deducted.
  8. Issue Form 132 (the TDS certificate) to the seller, generally within 15 days from the due date of Form 141.
  9. Keep records: sale agreement, payment proofs, Form 141 acknowledgement, Form 132 and the seller's documents.

Common Mistakes

  • Deducting only 1% because the buyer or bank assumed the seller is resident. The buyer can be treated as an assessee in default for the shortfall, with interest.
  • Skipping TDS because the price is below ₹50 lakh. That threshold does not apply to NRI sellers.
  • Applying the relief to a company or firm buyer. Only resident individuals and HUFs are covered.
  • Deducting on the gain without a certificate. The buyer cannot compute the seller's gain alone. Without a section 395 certificate, the safer course is to deduct on the full consideration.
  • Ignoring advance payments. TDS applies to each payment, including token money and instalments.

Frequently Asked Questions

Do I need a TAN to buy property from an NRI? If you are a resident individual or HUF and the tax is deducted on or after 1 October 2026, no. You can deposit the TDS with your PAN through Form 141 Schedule E. Before that date, a TAN was required.

Has the TDS rate for NRI property sales been reduced? No. Only the procedure has changed. TDS is still deducted at the rate applicable to the seller's capital gain, plus surcharge and cess.

Is there a ₹50 lakh threshold when the seller is an NRI? No. That threshold applies only to resident sellers. TDS applies to any purchase price when the seller is non-resident.

My company is buying the property. Does this relief apply? No. The amendment covers only resident individuals and HUFs. Companies, firms and LLPs still need a TAN.

What if the NRI seller does not have a PAN? Schedule E allows the seller's Tax Residency Certificate, foreign Tax Identification Number and contact details to be reported instead. Collect these before payment to avoid deduction at a higher rate.

Can TDS be deducted only on the profit instead of the full price? Only if the seller obtains a lower or nil deduction certificate under section 395 from the Income Tax Department. Without one, deduct on the full consideration.

We are joint buyers. Who files? Each buyer deducts TDS on their share of the payment and files a separate Form 141.

Conclusion

From 1 October 2026, a family buying a home from an NRI no longer needs a TAN or quarterly TDS returns. A PAN-based Form 141 filing is enough. The tax has not become lighter, though. Getting the seller's status, documents and any lower deduction certificate right before payment remains the buyer's job.

If you are buying property from an NRI in Ghaziabad or elsewhere, our team can help you work out the TDS and file Form 141 correctly.

Disclaimer: This article is for general information and reflects the position verified as of 26 September 2026. The application of these provisions depends on the facts of each case and on any later notifications or clarifications.

References

How We Can Help

Buying a flat, house or plot from an NRI seller? We help resident buyers across Ghaziabad and Delhi NCR work out the correct TDS for NRI property purchases, complete Form 141 Schedule E and Form 132, and assist with lower or nil deduction certificates under section 395 of the Income-tax Act, 2025 — so you deduct the right amount and stay compliant after the TAN relief that took effect on 1 October 2026. Call +91 88025 86988, Chat on WhatsApp, or visit our office at Krishna Plaza, Vrindavan Garden, Sahibabad, Ghaziabad.

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CA Ashish Rajput, Chartered Accountant

About the Author

CA Ashish Rajput — Chartered Accountant, Proprietor

Ashish Rajput is a practising Chartered Accountant and the proprietor of Ashish Jayalata & Associates, based in Vrindavan Garden, Sahibabad, Ghaziabad. He provides income tax, GST, audit, accounting, and business compliance services to individuals and businesses across Ghaziabad and the wider NCR region. The practice is registered with the Institute of Chartered Accountants of India (ICAI).