TDS on NRI property purchase: TAN dropped from 1 October
From 1 October 2026 a resident individual or HUF buying from a non-resident no longer needs a TAN. Deduct under 393(2), report on Form 141 Schedule E.
From 1 October 2026 a resident individual or HUF buying immovable property from a non-resident no longer needs a TAN. CBDT Notification No. 121/2026, dated 22 September 2026, moves the deduction onto the PAN-based Form 141 with a new Schedule E. The rate and the liability are unchanged — only the paperwork route is.
If you are buying a Bengaluru flat from an owner who has moved abroad, this removes the single most common reason those deals used to stall.
What actually changed
Until now, a buyer paying a non-resident seller was deducting under the provision that carried forward from old section 195, and that route required a TAN — a separate tax deduction account number, applied for, issued, and then used to file a quarterly return. A private individual buying one flat had to take on the compliance machinery of a business.
Notification No. 121/2026 [G.S.R. 830(E)] removes that. Resident individuals and Hindu undivided families deducting under section 393(2) on the transfer of immovable property by a non-resident are exempt from obtaining a TAN. You deduct against your PAN and report on Form 141, the unified challan-cum-statement.
The amendments sit in rules 215(1), 218(3) and 219 of the Income-tax Rules, 2026, with consequential changes to Forms 132 and 141. They take effect on 1 October 2026.
Why this mattered so much in practice
The TAN requirement was not a formality. It was the step that broke deals.
A buyer discovers late that the seller is a non-resident. The TAN has to be applied for and issued before the deduction can be properly reported. Meanwhile the loan sanction is running, the seller is abroad and difficult to reach, and everyone has already agreed a registration date. Deals routinely slipped weeks on this alone, and buyers who deducted without a TAN — or deducted as though the seller were resident — created a problem that surfaced much later.
That failure mode is now largely gone for individual and HUF buyers.
What has not changed, and this is the important part
The rate. Deduction follows the nature of the seller’s gain: 12.5% where it is long term and 30% where it is short term, plus surcharge and cess.
The absence of a threshold. When you buy from a resident, deduction only bites above a prescribed consideration. When you buy from a non-resident, there is no such floor. Every rupee of consideration is within the deduction.
Who carries the risk. The obligation is the buyer’s. Deduct short, and the shortfall plus interest is recovered from you, not from the seller who has taken the money overseas. This is the same principle that applies when the seller is resident — only here the amounts are far larger, because a 12.5% or 30% deduction on the whole consideration dwarfs the 1% most buyers are used to.
That asymmetry is why the residential status of your seller is not a box-ticking question. On a ₹2 crore flat, treating a non-resident seller as resident understates the deduction by tens of lakhs, and it is your liability.
What Schedule E will ask you for
Gather this before you pay, not after. Schedule E requires:
- The property address and whether it is land, building, or both
- Every buyer’s PAN, name and proportionate share of the consideration
- Agreement date, registration date, stamp duty value and total consideration
- Whether payment is lump sum or in instalments, with the sequence
- The seller’s PAN where available, and their name, status, contact number, email and overseas address
- Where the seller has no PAN, a Tax Residency Certificate and Tax Identification Number under rule 217
- Whether the gain is long term or short term
- The rate applied, the tax deducted, and any certificate under section 395
The seller-side items are the ones to secure early. A non-resident seller’s overseas address, TRC and TIN are easy to obtain while they still need something from you and very hard to chase once the consideration has been paid.
The certificate worth asking about
Section 395 allows a seller to obtain a certificate for deduction at a lower rate or nil rate, where their actual tax liability is less than the headline deduction.
This matters to your negotiation. A non-resident seller facing a 12.5% deduction on the full consideration, against an actual liability computed only on their gain, has a real cash-flow reason to obtain one. If they produce a valid certificate you deduct at the certified rate and record it in Schedule E. If they simply assert a lower liability without a certificate, you deduct the full amount — their remedy is a refund in their own return, not your discretion.
Never agree to deduct less because the seller says their gain is small. The certificate exists precisely so that assertion can be verified by someone other than you.
What to do if you are mid-transaction
If you are buying from a non-resident and completing on or after 1 October 2026, you are on the new route: no TAN, Form 141 with Schedule E, filed within 30 days from the end of the month of deduction under rule 219(5).
If you already hold a TAN because you started earlier, take advice on which route applies to deductions you have already made rather than assuming the new notification cleans up past filings. It changes the requirement going forward; it is not an amnesty.
And confirm the seller’s residential status in writing, in the agreement, with an indemnity. Residential status is a question of fact about days spent in India, not a matter of the seller’s opinion, and you are the one who pays if it is wrong.
Check the current position on the Income Tax Department’s portal before you deduct — rates and rules move, and a blog post is not a substitute for the notification itself. Where proceeds are to be remitted abroad, the RBI’s rules on repatriation apply in addition, and the deed itself is registered through Kaveri.
Frequently asked questions
Do I need a TAN to buy property from an NRI?
Not from 1 October 2026 if you are a resident individual or a Hindu undivided family. CBDT Notification No. 121/2026 dated 22 September 2026 exempts you from obtaining a TAN for deduction under section 393(2) on the purchase of immovable property from a non-resident. You report and deposit through Form 141 against your PAN instead.
What is Form 141 Schedule E?
Schedule E is the new part of Form 141 for reporting TDS on consideration paid to a non-resident for transfer of immovable property. It asks for the property particulars, every buyer's PAN and share, the stamp duty value and sale consideration, instalment details, the seller's PAN or tax residency certificate and TIN, the nature of the capital gain, the rate applied and any certificate under section 395.
Did the TDS rate on buying from an NRI change?
No. The notification changes the compliance route, not the liability. The rate continues to follow the nature of the seller's gain — 12.5% where the gain is long term and 30% where it is short term, plus applicable surcharge and cess — and unlike a purchase from a resident there is no value threshold below which deduction is not required.
When must Form 141 be filed after deducting?
Within 30 days from the end of the month in which the deduction was made, under rule 219(5). Deduct at payment, deposit, and file inside that window rather than waiting until registration is done.