Buying a property from an NRI involves specific tax and compliance requirements that every buyer should understand before completing the transaction. One important change is set to take effect from October 1, 2026, making the process simpler for eligible resident buyers.
Until September 30, 2026, resident individuals and HUFs purchasing property from an NRI must obtain a Tax Deduction Account Number (TAN) to deduct and deposit TDS. From October 1, eligible buyers will be able to use their PAN instead of obtaining a TAN. However, the responsibility to deduct and deposit TDS will continue.
TDS Applies From the First Rupee
Unlike property purchases from resident sellers, there is no ₹50 lakh threshold for TDS when buying property from an NRI. TDS applies from the first rupee of the transaction. The applicable deduction can also be significantly higher than the 1% rate generally associated with eligible transactions involving resident sellers.
The tax deduction may depend on factors such as the seller’s holding period and whether a lower or nil deduction certificate has been obtained. In the absence of such a certificate, the buyer may need to deduct TDS on the applicable sale consideration.
Plan the Transaction Carefully
If an NRI seller is planning to sell property before October 1, 2026, the existing TAN-based compliance process should be considered while planning the timeline. A lower TDS certificate may also require additional time and documentation.
For buyers and NRI sellers, understanding NRI property sale TDS rules, TAN requirements and PAN-based TDS changes can help avoid delays and compliance issues during property registration.
