NRI Taxation · TDS on Property

Buying Property from NRI: New TDS Rules from 1 October 2026

By Sumit Bihani  ·  1 October 2026

If you are buying a property from a Non-Resident Indian (NRI), you no longer need to go through the hassle of obtaining a TAN number.

From 1st October 2026, the requirement to obtain a separate TAN (Tax Deduction and Collection Account Number) to deduct tax at source on such a purchase of property has been eased by the CBDT.

For years, this single requirement made an otherwise ordinary transaction feel intimidating. A buyer would often have to apply for, track and manage a TAN simply for a one-time deal. That compliance is now gone.

What was previously required, and what has changed for transactions with an NRI

Previously, when a resident was buying a property from an NRI, the transaction required the resident to obtain a TAN under Section 393(2) (Income-tax Act, 2025) / Section 195 (the Income-tax Act, 1961).

This distinction drives everything. When the seller is a resident, the buyer simply deducts 1% TDS on the sale value under Section 393(1).

However, when the seller is an NRI, Section 393(2) applies, and the buyer is required to deduct TDS at 12.5% (along with surcharge and cess) in the case of Long-Term Capital Gains, or at slab rates in the case of Short-Term Capital Gains.

Until now, to deduct this TDS the buyer first had to obtain a TAN, even for a single purchase. It was this procedural step, more than the tax itself, that caused delays in the transaction and anxiety for ordinary home buyers.

What changed from 1 October 2026

The Central Board of Direct Taxes (CBDT) has removed the TAN requirement for resident individuals and Hindu Undivided Families (HUFs) buying property from a non-resident. Now the buyer can deduct TDS by quoting the PAN number and make the payment in Schedule-E of the Form 141 challan-cum-statement.

In practical terms, this means:

• The buyer can now deduct, deposit and report the TDS using their existing PAN, instead of a separate TAN.
• At the time of sale, the buyer now provides a form-cum-challan on which the seller can see his PAN number; whereas earlier, in the case of a TAN, the seller had to wait till the end of the quarter for the buyer to file the TDS return in Form 27Q.
• The receipt of the Form 141 challan-cum-statement at the time of the transaction builds greater trust and comfort for the seller.

This is a genuine simplification for the ordinary buyer, who no longer has to navigate the TAN process for a one-off transaction.

What has not changed

The tax obligation and the rate of TDS remain the same. Only the paperwork has become lighter.

The buyer must still:

1. Correctly determine whether the seller is a resident or a non-resident.
2. Apply the right TDS rate on the transaction, which is based on two components:
   • Type of capital gains — Long-Term / Short-Term
   • Sale value, to determine the applicable surcharge and cess.
3. Deposit the TDS with the government on time.