Buying property from an NRI has become simpler for resident individual buyers and HUFs. From October 1, 2026, they no longer need to obtain a separate Tax Deduction and Collection Account Number (TAN) to deduct TDS when purchasing immovable property from a non-resident.
Instead, buyers can use their PAN to deduct and report the tax through the newly expanded Form 141, which now includes Schedule E specifically for property transactions involving non-resident sellers. The change is aimed at reducing the compliance burden for what can often be a one-time property transaction.
The important part, however, is that TDS itself has not been removed. The buyer still has to deduct tax at the applicable rate under the non-resident provisions.
What changed from October 1, 2026?
Earlier, a resident individual or HUF buying property from a non-resident had to obtain a TAN before complying with the TDS requirement. The buyer also had to follow the separate reporting and certificate requirements applicable to such transactions. The new framework removes that extra step.
From October 1, eligible buyers can:
- Use their PAN instead of TAN for the transaction.
- Deduct and deposit TDS through Form 141.
- Report the transaction under the newly introduced Schedule E.
- Provide the prescribed Form 132 TDS certificate to the seller.
The relief specifically applies to resident individuals and HUFs. It should not be read as a blanket removal of TAN requirements for every type of buyer.
What does Schedule E require?
The new Schedule E brings NRI property purchases into the PAN-based Form 141 framework, but it still requires detailed information about the transaction.
Buyers need to provide details such as:
- Property address and type
- Date of agreement and registration, where applicable
- Total sale consideration and stamp duty value
- Details of all buyers and their respective shares
- NRI seller’s PAN, where available
- Overseas address and contact details
- Foreign Tax Identification Number and Tax Residency Certificate details, where applicable
- Payment and instalment details
- TDS deducted and the applicable rate
- Details of any lower or nil deduction certificate.
Buyers should collect the seller’s tax and overseas details before making the first payment, rather than waiting until the registration stage.
NRI seller vs resident seller: What changes?
The new filing mechanism may look similar to the process used for resident-seller transactions, but the underlying TDS rules are different.
|
Parameter |
Resident seller |
NRI/non-resident seller |
|
TAN for resident individual/HUF |
Not required |
Not required from Oct 1, 2026 |
|
Form |
Form 141 – Schedule B |
Form 141 – Schedule E |
|
Rs 50 lakh threshold |
Applies under the resident-property provision |
Does not apply |
|
TDS rate |
1% under the applicable provision |
Applicable non-resident rate |
|
TDS certificate |
Form 132 |
Form 132 |
|
Form 141 deadline |
Within 30 days from the end of deduction month |
Within 30 days from the end of deduction month |
When buying qualifying property from a resident seller, the 1% TDS provision applies once the prescribed Rs 50 lakh threshold is crossed. That provision does not apply when the seller is a non-resident.
For an NRI/non-resident seller, TDS continues to be governed by the applicable non-resident provisions, and there is no equivalent Rs 50 lakh threshold.
How to complete the new TDS process?
The process under the new framework is relatively straightforward:
Confirm the seller’s status and applicable rate: Establish that the seller is a non-resident for income-tax purposes and determine the applicable TDS rate before making the payment.
Collect the seller’s details: Obtain the seller’s PAN, overseas address and contact details, and the required foreign tax identification or residency information where applicable.
Deduct TDS when payment is made: TDS generally has to be deducted at the time of payment or credit to the seller, whichever is earlier. This also matters when the property is being purchased through instalments.
File Form 141 using Schedule E: The eligible resident individual or HUF can report the transaction through Form 141, Schedule E, using their PAN. The challan-cum-statement must be furnished within 30 days from the end of the month in which the TDS was deducted.
Provide Form 132 to the seller: The amended Form 132 serves as the prescribed TDS certificate for the transaction. It is to be furnished within the prescribed timeline after the Form 141 filing.
What buyers should not get wrong
The underlying non-resident TDS provisions still apply, so buyers need to get the rate, threshold and reporting requirements right.
Three things are particularly important:
Don’t apply 1% TDS. The resident-seller property rule does not apply to an NRI seller.
Don’t wait for the Rs 50 lakh threshold. The resident-property threshold does not apply to the non-resident transaction.
Don’t treat Form 141 as a simple one-line filing. Schedule E requires detailed information about the property, buyers, seller, payments and TDS. If there are multiple buyers, the form also captures their respective shares, and each deductor is required to file separately where applicable.
The October 1 change makes the TDS process simpler by removing the TAN requirement for eligible resident individual and HUF buyers. But it does not remove the TDS obligation or make an NRI property transaction subject to the same rules as a resident-seller transaction.
