Buying property from an NRI? TAN rule changes from October 1, 2026. What buyers should know
The applicable TDS rate depends on whether the sale results in long-term capital gains (LTCG) or short-term capital gains (STCG).
- Aug 28, 2026,
- Updated Aug 28, 2026 12:23 PM IST
A key tax compliance requirement for resident buyers purchasing property from non-resident Indians (NRIs) is set to change from October 1, 2026.
Eligible resident individuals and Hindu Undivided Families (HUFs) will be able to deposit tax deducted at source (TDS) using their Permanent Account Number (PAN) instead of first obtaining a Tax Deduction and Collection Account Number (TAN). However, until September 30, 2026, buyers must continue to follow the existing process, including obtaining a TAN before depositing TDS.
Buying property from an NRI also attracts a different TDS regime from transactions involving resident sellers. Unlike resident sellers, where TDS is applicable only if the sale consideration exceeds Rs 50 lakh, there is no minimum threshold for deducting TDS when the seller is an NRI.
TDS rate depends on whether gains are long term or short term
The applicable TDS rate depends on whether the sale results in long-term capital gains (LTCG) or short-term capital gains (STCG). For immovable property, a sale after the prescribed holding period of more than two years is treated as a long-term capital gain under the new tax law.
Chartered Accountant Suresh Surana says when a NRI seller sells his/her India property, the TDS rate is governed by Section 393(2), Table Sl. No. 17 of the Income-tax Act, 2025 and in such cases, the buyer must deduct TDS at applicable rates of 12.5% (plus surcharge and cess) for long-term capital gains and at slab rates of the NRI (plus surcharge and cess) for short-term capital gains.
Why proof of TDS payment matters
Neeraj Agarwala, Senior Partner, Nangia & Co LLP, told Economic Times that unlike resident sellers (where TDS is only 1% under Section 194-IA), TDS on sale of property by NRI is much higher.
Agarwala says: "Accordingly, many states' sub-registrar offices insist on proof of payment of TDS either in the form of TDS Certificate, in case of lower deduction or no deduction, or TDS challan or both. The idea is to ensure that the requisite TDS has been discharged by the buyer."
As a result, buyers should ensure the applicable TDS has been deposited and retain the necessary documents, as many sub-registrar offices seek proof of payment during the property registration process.
How to obtain the TDS challan
According to Surana, TDS is paid through a challan, and the online challan facility is available from April 1, 2026 as part of the standard TDS compliance system. There is no requirement to obtain a challan in advance. The challan is generated automatically at the time of making the payment on the income-tax portal.
Form 27Q is now being replaced with Form 144 under the Income-tax Rules, 2026, which will be available for filing before July 31, 2026, which is the due date for filing the form.
According to Surana, the process is as follows:
- The property buyer should log in to the Income-tax portal using their TAN credentials.
- Under the "e-Pay Tax" module, the buyer must enter the details of TDS deducted and proceed to make the payment online.
- While filing the challan, the buyer is required to specify whether the seller is a company or a non-company deductee, along with the seller's residential status. Further, the deductee must select the appropriate deduction description and other TDS details.
- The tax must be deposited within seven days from the end of the month in which the TDS is deducted, and the challan is generated automatically during this process.
TAN requirement continues until October 1, 2026
According to Surana, if a NRI seller is selling their property and this transaction is done before October 1, 2026, then the buyer (person responsible for deducting or collecting tax) is required to obtain a Tax Deduction and Collection Account Number (TAN) and comply with filing requirements under Form 144 of the Income-tax Rules, 2026 [corresponding to Form 27Q of the Income-tax Rules, 1962 (IT Rules 1962)].
Though Budget 2026 introduced an amendment removing the TAN requirement, the change will come into effect only from October 1, 2026.
The amendment was introduced under Section 397(1)(c) of the Income-tax Act, 2025, as amended by the Finance Act, 2026. It provides that a resident individual or HUF deducting tax on consideration for transfer of immovable property under Section 393(2) [Table: Sl. No. 17] may deposit TDS using PAN without obtaining a TAN.
Must Read: India, Canada eye Bilateral Investment Treaty to unlock ₹4.65 lakh crore trade by 2030
How resident buyers can apply for TAN
According to Agarwala, here's how resident property buyers can apply for TAN using the online process:
Step 1: First the resident buyer must apply for a TAN online. After filling the application form, the acknowledgment duly signed, along with a copy of specified documents like proof of address, identity and date of birth, shall be sent to Protean.
Step 2: Do not forget to superscribe the envelope with "APPLICATION FOR TAN - Acknowledgment Number". Application will be processed after receipt of duly signed acknowledgment and realisation of fee payment.
Further, joint buyers must obtain two separate TANs to deposit their respective share of the applicable TDS. However, after October 1, 2026, eligible resident individuals and HUFs will be able to deposit TDS using their PAN without obtaining a separate TAN.
A key tax compliance requirement for resident buyers purchasing property from non-resident Indians (NRIs) is set to change from October 1, 2026.
Eligible resident individuals and Hindu Undivided Families (HUFs) will be able to deposit tax deducted at source (TDS) using their Permanent Account Number (PAN) instead of first obtaining a Tax Deduction and Collection Account Number (TAN). However, until September 30, 2026, buyers must continue to follow the existing process, including obtaining a TAN before depositing TDS.
Buying property from an NRI also attracts a different TDS regime from transactions involving resident sellers. Unlike resident sellers, where TDS is applicable only if the sale consideration exceeds Rs 50 lakh, there is no minimum threshold for deducting TDS when the seller is an NRI.
TDS rate depends on whether gains are long term or short term
The applicable TDS rate depends on whether the sale results in long-term capital gains (LTCG) or short-term capital gains (STCG). For immovable property, a sale after the prescribed holding period of more than two years is treated as a long-term capital gain under the new tax law.
Chartered Accountant Suresh Surana says when a NRI seller sells his/her India property, the TDS rate is governed by Section 393(2), Table Sl. No. 17 of the Income-tax Act, 2025 and in such cases, the buyer must deduct TDS at applicable rates of 12.5% (plus surcharge and cess) for long-term capital gains and at slab rates of the NRI (plus surcharge and cess) for short-term capital gains.
Why proof of TDS payment matters
Neeraj Agarwala, Senior Partner, Nangia & Co LLP, told Economic Times that unlike resident sellers (where TDS is only 1% under Section 194-IA), TDS on sale of property by NRI is much higher.
Agarwala says: "Accordingly, many states' sub-registrar offices insist on proof of payment of TDS either in the form of TDS Certificate, in case of lower deduction or no deduction, or TDS challan or both. The idea is to ensure that the requisite TDS has been discharged by the buyer."
As a result, buyers should ensure the applicable TDS has been deposited and retain the necessary documents, as many sub-registrar offices seek proof of payment during the property registration process.
How to obtain the TDS challan
According to Surana, TDS is paid through a challan, and the online challan facility is available from April 1, 2026 as part of the standard TDS compliance system. There is no requirement to obtain a challan in advance. The challan is generated automatically at the time of making the payment on the income-tax portal.
Form 27Q is now being replaced with Form 144 under the Income-tax Rules, 2026, which will be available for filing before July 31, 2026, which is the due date for filing the form.
According to Surana, the process is as follows:
- The property buyer should log in to the Income-tax portal using their TAN credentials.
- Under the "e-Pay Tax" module, the buyer must enter the details of TDS deducted and proceed to make the payment online.
- While filing the challan, the buyer is required to specify whether the seller is a company or a non-company deductee, along with the seller's residential status. Further, the deductee must select the appropriate deduction description and other TDS details.
- The tax must be deposited within seven days from the end of the month in which the TDS is deducted, and the challan is generated automatically during this process.
TAN requirement continues until October 1, 2026
According to Surana, if a NRI seller is selling their property and this transaction is done before October 1, 2026, then the buyer (person responsible for deducting or collecting tax) is required to obtain a Tax Deduction and Collection Account Number (TAN) and comply with filing requirements under Form 144 of the Income-tax Rules, 2026 [corresponding to Form 27Q of the Income-tax Rules, 1962 (IT Rules 1962)].
Though Budget 2026 introduced an amendment removing the TAN requirement, the change will come into effect only from October 1, 2026.
The amendment was introduced under Section 397(1)(c) of the Income-tax Act, 2025, as amended by the Finance Act, 2026. It provides that a resident individual or HUF deducting tax on consideration for transfer of immovable property under Section 393(2) [Table: Sl. No. 17] may deposit TDS using PAN without obtaining a TAN.
Must Read: India, Canada eye Bilateral Investment Treaty to unlock ₹4.65 lakh crore trade by 2030
How resident buyers can apply for TAN
According to Agarwala, here's how resident property buyers can apply for TAN using the online process:
Step 1: First the resident buyer must apply for a TAN online. After filling the application form, the acknowledgment duly signed, along with a copy of specified documents like proof of address, identity and date of birth, shall be sent to Protean.
Step 2: Do not forget to superscribe the envelope with "APPLICATION FOR TAN - Acknowledgment Number". Application will be processed after receipt of duly signed acknowledgment and realisation of fee payment.
Further, joint buyers must obtain two separate TANs to deposit their respective share of the applicable TDS. However, after October 1, 2026, eligible resident individuals and HUFs will be able to deposit TDS using their PAN without obtaining a separate TAN.