Buying A Home From An NRI? You No Longer Need A TAN For TDS

If you are buying a house from a Non-Resident Indian (NRI), there is one less formality to complete. From October 1, 2026, resident individuals and Hindu Undivided Families (HUFs) can use their Permanent Account Number (PAN) for tax deducted at source (TDS) on the purchase. They no longer have to apply for a separate Tax Deduction and Collection Account Number (TAN) for the transaction.

They can instead use their PAN to deposit TDS and report the transaction through Form 141.

For someone buying a home, this removes an additional registration requirement that previously applied even to a one-time transaction. However, buyers still need to establish the seller’s tax residential status, calculate the deduction correctly, and deposit the money within the prescribed deadline.

Who Can Use The Simpler Process?

The relief applies specifically to resident individual and HUF buyers purchasing immovable property from non-resident sellers. Companies and firms buying such properties do not qualify for this exemption from obtaining TAN.

Earlier, eligible buyers dealing with non-resident sellers had to obtain TAN before completing their TDS compliance. The change allows them to handle the payment and reporting through a PAN-based challan-cum-statement.

The Central Board of Direct Taxes (CBDT) notified the revised reporting framework on September 22, 2026, with effect from October 1. It adds Schedule E to Form 141 for these transactions and updates Form 132, the corresponding TDS certificate.

Buyers should check residential status before deciding which reporting route to follow. A seller’s citizenship or overseas address alone does not settle their residential status under income tax law.

The Rs 50 Lakh Threshold Does Not Apply

A common mistake is to apply the familiar resident-seller property rules to a purchase from an NRI. The one per cent TDS rate and Rs 50 lakh threshold applicable to qualifying purchases from resident sellers do not govern purchases from non-residents.

Consequently, a property priced below Rs 50 lakh does not automatically escape TDS merely because its value falls below that figure. The October change simplifies compliance; it does not reduce the applicable tax rates.

For a non-resident seller, property held for more than 24 months generally results in long-term capital gains, for which the base tax rate is 12.5 per cent. Applicable surcharge and health and education cess must also be considered.

Property held for 24 months or less generally produces short-term capital gains. The withholding rate for a non-resident individual is ordinarily 30 per cent, before applicable surcharge and cess. Buyers should distinguish this withholding requirement from the seller’s final tax liability.

Keep Transaction Records Ready

Schedule E requires information about the property, buyers and sellers, their respective shares, sale consideration, stamp duty value and agreement and registration dates.

It also captures whether payment is made in a lump sum or instalments. Buyers making subsequent payments need previous acknowledgement details, making it important to retain records from the first payment onwards.

Details of any applicable lower-deduction certificate or tax authority determination must also be reported. Buyers should obtain the relevant authorisation before using a reduced deduction rather than relying solely on the seller’s calculation.

Under the revised framework, deducted tax and Form 141 must be submitted within 30 days from the end of the month in which the deduction occurs.

Before releasing money, buyers should settle the applicable rate, deduction amount, and reporting responsibilities. Using PAN removes one procedural hurdle, but accurate tax deduction remains part of completing the purchase.

FAQs

1. Do I still need a TAN to buy property from an NRI?
From October 1, 2026, resident individuals and HUFs can use PAN to deposit and report TDS through Form 141. Companies and firms still need TAN.

2. Is TDS applicable if the property costs less than Rs 50 lakh?
Yes. The Rs 50 lakh threshold applicable to purchases from resident sellers does not apply when the seller is a non-resident.

3. What is the deadline for depositing TDS and filing Form 141?
Both must be completed within 30 days from the end of the month in which the tax was deducted.