Buying Property from an NRI Gets Easier: New PAN-Based TDS Compliance from 1 October 2026
Buying a property from a resident seller is relatively straightforward from a TDS compliance perspective. But when the seller is a non-resident, the paperwork has traditionally been much more complicated. A transaction that may happen only once in a lifetime could require the buyer to obtain a TAN, deduct tax under the provisions applicable to payments to non-residents and comply with quarterly TDS return requirements.
The Central Board of Direct Taxes has now attempted to make this process considerably simpler for resident individual and HUF buyers.
What has changed?
Through Notification No. 121/2026 [G.S.R. 830(E)], dated 22 September 2026, the Income-tax (Fifth Amendment) Rules, 2026 have introduced changes that will apply from 1 October 2026.
Under the new mechanism, a resident individual or HUF purchasing immovable property from a non-resident can report the TDS transaction through Form No. 141, on a transaction-wise, PAN-based basis.
In other words, the compliance mechanism for such buyers is being brought closer to the simpler system already familiar to buyers purchasing property from resident sellers.
The amended Rules 215, 218 and 219 provide the framework for reporting the payment and deduction, while a new Schedule E captures the additional information relating to the non-resident seller.
Is TAN no longer required?
This is perhaps the most interesting practical aspect of the amendment.
The notification does not expressly state that the requirement of obtaining a TAN has been abolished for every such transaction. However, by moving eligible resident individual and HUF buyers to the PAN-based Form 141 mechanism, the practical compliance burden of maintaining a separate TAN-based quarterly TDS reporting mechanism is substantially reduced.
Therefore, buyers entering into transactions with non-resident sellers from 1 October 2026 should carefully examine the new procedure rather than automatically following the earlier TAN-based process.
But simplicity for the buyer means more information about the seller
The new system may be simpler in terms of reporting, but it is certainly not a case of “just deduct tax and forget it”.
Schedule E requires several details relating to the non-resident seller. These include the seller’s foreign address, telephone number and email address, even where the seller possesses an Indian PAN.
The form also requires information relating to the nature of the capital gain, including whether the gain is long-term or short-term.
Further information may be required regarding whether the seller has opted out of the applicable default tax regime and whether a lower deduction certificate has been obtained.
This means that the buyer cannot treat TDS as merely a banking or accounting formality. The buyer needs to collect relevant information from the seller well before the payment becomes due.
What if the NRI seller does not have a PAN?
The compliance becomes even more important where the non-resident seller does not possess an Indian PAN.
In such cases, the prescribed documents, including the Tax Residency Certificate (TRC) and foreign tax identification number, assume importance under the applicable rules. Failure to furnish the required information can result in deduction of tax at the higher applicable rate.
Therefore, obtaining the seller’s tax documentation should form part of the transaction checklist itself.
What about joint buyers?
Another practical point is relevant where a property is purchased jointly.
Where there are multiple buyers, each buyer should ensure compliance with the requirements applicable to him or her and furnish the prescribed form in accordance with the rules.
Thus, merely assuming that one buyer will complete the entire TDS compliance on behalf of all co-buyers may create avoidable complications.
A change that buyers should plan for
The real benefit of the amendment will be felt by ordinary taxpayers who purchase property from an NRI only once or occasionally.
Previously, the TDS compliance framework could feel disproportionate to the transaction. A buyer purchasing a house or plot from an NRI could suddenly find himself dealing with TAN, TDS returns and several technical requirements that would be unfamiliar to an ordinary individual.
The new PAN-based reporting mechanism is therefore a welcome step towards simplifying compliance.
However, the simplification should not be misunderstood as relaxation of the responsibility to deduct the correct amount of tax.
The buyer must still establish the seller’s residential status, obtain the necessary PAN and other tax information, determine the applicable rate and comply with the prescribed reporting and payment requirements.
The practical checklist
For any property transaction with an NRI where payment is scheduled on or after 1 October 2026, buyers should ideally collect the following information at the agreement stage itself:
• Seller’s PAN, wherever available
• Confirmation of non-resident status
• Foreign address, telephone number and email ID
• Foreign Tax Identification Number, wherever applicable
• Tax Residency Certificate, where required
• Details relevant for determining the nature of the capital gain
• Details of any lower-deduction certificate
• Information regarding the applicable tax regime, wherever relevant
• Details of all co-buyers and their respective shares
Waiting until the date of registration or payment to collect these details could turn a simple property transaction into a compliance headache.
The larger message
The amendment is a welcome move towards making tax compliance proportionate to the nature of the transaction.
For a resident individual buying property from an NRI, the process should become substantially more convenient from 1 October 2026. But convenience does not mean that the buyer can remain indifferent to the seller’s tax profile.
In fact, the message for buyers is quite simple:
When buying property from an NRI, do not start the TDS compliance on the date of payment. Start it when the agreement is being negotiated.
That one change in approach can prevent a last-minute scramble for PAN, TRC, foreign tax details and certificates—and make the NRI property transaction considerably smoother.
The copy of the Notification is as under:
