Budget 2026 Brings Parity In TDS Rules For NRI And Resident Property Sales

Planning to buy a piece of property from a non-resident Indian (NRI) and worried about the need to obtain a separate Tax Deduction and Collection Account Number (TAN) for TDS compliance? Relax. In the Union Budget 2026–27, the government has proposed to simplify this process - resident buyers will no longer be required to obtain a TAN for TDS on NRI property purchases, and can instead use their PAN to deduct and deposit the tax.

According to tax experts, currently, buyers of immovable property from resident sellers do not need a TAN for tax deduction at source. However, when the seller is a non-resident, buyers must obtain a TAN to deduct tax on the payment. This adds an extra compliance burden for resident individuals and Hindu Undivided Families (HUFs), especially in one-off property purchases.

Sandeepp Jhunjhunwala, Partner, Nangia Global Advisors, says, “Withholding tax required to done on purchase of property from a non-resident Indian was hitherto governed under Section 195 of the Income Tax Act, requiring the Indian resident purchaser to withhold and deposit taxes in India, using Tax Deduction and Collection Account Number (TAN), and thereafter file TDS returns, reflecting this transaction.”

This posed significant challenge, as resident individual taxpayers are otherwise generally not required to obtain TAN for any other withholding requirements for any other non-business-related domestic purchases, including buying properties from Indian sellers, where existing PAN of the resident buyer could be used to deduct required taxes under Section 194-IA of the Income Tax Act.

“The proposed amendment would bring compliance or filing parity in withholding taxes using PAN of the resident buyer, on purchase of property from a non-resident Indian and other Indian residents. This clears the aversion that resident buyers had while buying properties from an NRI, as obtaining TAN for such transactions was clearly onerous and lead to increased paperwork for property deals with NRIs,” Jhunjhunwala says.

Anuja N Mukerji, Partner, AQUILAW, says the proposal to allow resident buyers to deduct and deposit TDS on property purchases from non-resident sellers using a PAN-based challan is a welcome rationalisation of the compliance framework.

“By removing the requirement to obtain a separate TAN for what is often a one-time transaction, the government has addressed a long-standing pain point that caused delays, confusion and procedural burden. The move aligns the treatment of non-resident and resident property transactions, improves ease of compliance, and should significantly reduce administrative friction for taxpayers without diluting tax oversight,” Mukerji adds.

Gauri Jagtap, Partner Designate, King Stubb & Kasiva, Advocates and Attorneys, also notes that the Union Budget 2026 has brought much-needed clarity and procedural ease for resident buyers purchasing property from NRIs by simplifying TDS compliance. By streamlining deduction and reporting requirements, the government has addressed a long-standing pain point that often delayed transactions due to ambiguity and complex filings.

“This move not only reduces compliance burden and litigation risk for buyers but also enhances transparency in cross-border real estate transactions. Overall, it is a pragmatic step that aligns with the government’s objective of improving ease of doing business and facilitating smoother capital flows in the real estate sector,” she adds.

However, other aspects for NRI sellers - such as the applicable income tax on the sale of property in India, the need to approach the income tax department for a lower withholding tax certificate (wherever required), and the filing of income tax returns in India - remain unchanged.