A major compliance change for property transactions involving non-resident Indian (NRI) sellers is set to take effect from October 1, 2026, reducing the paperwork required for resident buyers. Until September 30, 2026, buyers purchasing property from NRI sellers must continue to follow the existing TAD-based TDS process. From October 1, eligible buyers will be able to use their Permanent Account Number (PAN) instead of obtaining a separate TAN.
TAN requirement continues until September 30
The existing rules remain applicable to transactions where the NRI seller receives consideration before October 1, 2026. A resident individual or Hindu Undivided Family buying immovable property from a non-resident seller currently needs to obtain a TAN before deducting and depositing TDS.
This makes the transaction more complex than buying property from a resident seller, where the buyer can generally use their PAN for TDS reporting. It also requires the buyer to complete additional reporting formalities. Therefore, NRIs planning to sell property before September 30 should account for the buyer’s TAN application and TDS compliance in the transaction timeline.
PAN to replace TAN from October 1, 2026
From October 1, 2026, resident buyers will no longer need a separate TAN when deducting TDS on payments for immovable property purchased from an NRI. Instead, the buyer can use their PAN and report the deduction through the prescribed PAN-based challan-cum-statement.
The change makes the process of buying property from an NRI similar to that for buying property from a resident seller. It also reduces the compliance burden on buyers, as they will no longer need to obtain a separate TAN just to complete a single property transaction.
TDS obligation on NRI property sales remains
The removal of TAN does not mean that TDS will no longer apply. The buyer will still have to deduct tax when purchasing immovable property from an NRI. Unlike purchases from resident sellers, where Section 194-IA provides a Rs 50 lakh threshold, payments to non-resident sellers are covered separately under the provisions applicable to non-residents. There is no corresponding Rs 50 lakh threshold for NRI property sales.
The applicable TDS rate also depends on the nature of the seller’s capital gain. For long-term capital gains on property, the base rate is 12.5% for transfers on or after July 23, 2024. Short-term capital gains are generally taxed at the applicable rate for the non-resident seller. Surcharges and cesses may also apply, and the final tax liability may vary depending on the provisions of an applicable tax treaty.
What changes after October 1
For transactions completed before October 1, buyers should not assume that the upcoming PAN-based system can be used early. The TAN-based mechanism remains mandatory through September 30, 2026. Buyers should therefore account for the time required to obtain TAN, deduct TDS correctly, deposit the amount and complete the applicable reporting. The tax deduction and related documentation can also be relevant during the property registration process.
The change lies in the compliance process rather than in the tax liability. From October 1, a resident buyer purchasing property from an NRI can deduct and report TDS using their PAN without obtaining a separate TAN. This removes one layer of registration and compliance from the transaction. For NRIs selling Indian property, the distinction between transactions completed before and after October 1 is therefore important. While the tax-deduction requirement continues, the process for the buyer becomes simpler as of the new effective date.
