Buying Property from an NRI? No TAN Required for Individual and HUF Buyers from 1 October 2026
NRI Property Purchase TDS Rules 2026 | TAN Exemption for Resident Individuals and HUFs | Form 141, Schedule E
Buying a property from a Non-Resident Indian (NRI) has traditionally been a compliance-heavy transaction for an ordinary resident individual. Unlike a purchase from a resident seller, where the buyer may generally deduct TDS under a simplified mechanism, purchasing immovable property from a non-resident seller involves a different set of tax deduction and reporting requirements.
For many individual buyers, the biggest challenge was not the deduction of tax itself but the procedural requirement of obtaining a Tax Deduction and Collection Account Number (TAN), even when the buyer was purchasing a property only once in a lifetime.
Recognising this practical difficulty, the Central Board of Direct Taxes (CBDT) has introduced a significant procedural simplification.
The CBDT has notified the Income-tax (Fifth Amendment) Rules, 2026, vide Notification No. 121/2026 dated 22 September 2026. With effect from 1 October 2026, resident individuals and Hindu Undivided Families (HUFs) purchasing immovable property from a non-resident seller will no longer be required to obtain a TAN for deducting and depositing TDS.
This is a welcome relief for individual property buyers and is expected to make NRI property transactions considerably simpler.
1. Why Was TAN a Major Compliance Challenge for Individual Buyers?
Until 30 September 2026, a resident individual or HUF purchasing immovable property from an NRI was required to comply with the applicable TDS provisions governing payments to non-residents.
The buyer was required to:
– Obtain a TAN.
– Deduct tax at the applicable rate.
– Deposit the deducted tax through the prescribed challan.
– File a quarterly TDS statement in Form 144, earlier Form 27Q.
– Issue a TDS certificate in Form 131, earlier Form 16A.
For a person purchasing a residential property from an NRI, these requirements could be burdensome.
Imagine an individual purchasing a flat from an NRI for ₹1 crore. The buyer may never have deducted TDS in any other transaction. Yet, for this single purchase, the buyer had to register as a tax deductor, obtain a TAN, deposit tax, file a quarterly statement and issue a certificate.
The procedural burden was disproportionate to the nature of the transaction.
In many cases, buyers either failed to obtain a TAN or incorrectly deducted TDS at 1% by treating the NRI seller like a resident seller.
The new amendment seeks to address this difficulty.
2. What Has Changed from 1 October 2026?
The new rules provide that a resident individual or HUF purchasing immovable property from a non-resident seller can deduct and deposit TDS without obtaining a TAN.
The simplified procedure is as follows:
Particulars| Earlier Procedure| New Procedure from 1 October 2026
TAN requirement| Mandatory| Not required for eligible individual/HUF buyers
Tax deposit| Through TAN-based challan process| Through Form 141, Schedule E
Identification| TAN| Buyer’s PAN
Quarterly TDS statement| Form 144 (earlier Form 27Q)| Simplified PAN-based procedure
TDS certificate| Form 131 (earlier Form 16A)| Form 132
The tax is deposited through Form 141, Schedule E, using the buyer’s PAN.
The buyer is required to issue the TDS certificate to the seller in Form 132.
The amendment therefore removes the need for a separate TAN registration for eligible resident individual and HUF buyers.
3. Who Can Avail the TAN Exemption?
The benefit of this procedural relaxation is specifically available to:
– Resident Individuals; and
– Hindu Undivided Families (HUFs).
The relaxation is not universally applicable to every person purchasing immovable property from a non-resident.
Companies, partnership firms and other entities continue to follow the TAN-based procedure, including the quarterly statement requirement in Form 144.
Thus, the residential status of the seller and the legal status of the buyer become crucial factors in determining the applicable TDS compliance mechanism.
4. TDS Obligation Continues Despite TAN Exemption
It is important to understand that the amendment provides procedural relief; it does not eliminate the obligation to deduct tax.
The deduction obligation continues under Section 393(2) of the Income-tax Act, 2025, Table Sl. No. 17, corresponding to Section 195 of the Income-tax Act, 1961.
Therefore, the buyer must continue to determine the applicable TDS rate and comply with the statutory requirements.
The absence of a TAN should not be misunderstood as an exemption from TDS.
The buyer must still:
– Verify the residential status of the seller.
– Determine the applicable rate of deduction.
– Deduct tax at the appropriate stage.
– Deposit the tax through the prescribed procedure.
– Issue the required certificate to the seller.
The simplified mechanism is intended to make compliance easier, not to dilute the tax obligation.
5. Lower TDS Certificate for NRI Sellers: Form 128 Replaces Form 13
Another important aspect of NRI property transactions is the possibility of obtaining a certificate for deduction of tax at a lower rate.
A non-resident seller may apply for a lower deduction certificate under Section 395(1) of the Income-tax Act, 2025.
The application is now made in Form 128, which replaces the earlier Form 13 under Section 197 of the Income-tax Act, 1961.
Where the seller obtains such a certificate, the buyer may deduct tax at the rate specified in the certificate, subject to its terms and validity.
However, an important practical point must be noted:
The lower deduction certificate covers only payments made after the certificate is issued.
Consequently, a certificate obtained after the main payment has already been released may not provide the intended benefit for the earlier payment.
For this reason, NRI sellers should consider applying for a lower deduction certificate well in advance of the transaction.
6. What Happens Where Property Payments Are Made in Instalments?
A practical issue may arise where the property consideration is paid in instalments and the payments fall on both sides of 1 October 2026.
For example, suppose a resident individual purchases property from an NRI and pays:
– An advance on 15 September 2026; and
– The balance consideration on 15 November 2026.
In such a situation, the payment made before 1 October 2026 would follow the earlier TAN-based procedure, while the payment made on or after 1 October 2026 may be covered by the simplified Form 141 mechanism, subject to the applicable rules.
This is an important transitional consideration.
Buyers should not assume that the new procedure automatically applies retrospectively to all payments under an existing agreement.
The date of each payment and the applicable compliance mechanism must be carefully examined.
7. Practical Checklist for Buying Property from an NRI
Before entering into a property transaction involving an NRI seller, a resident individual or HUF buyer should take the following precautions:
Step 1: Confirm the seller’s residential status
The seller’s residential status under the Income-tax Act is crucial. The fact that the seller holds an Indian passport or owns property in India does not, by itself, establish residential status.
Step 2: Determine the applicable TDS provisions
The buyer must identify the relevant statutory provision and applicable rate of deduction.
Step 3: Confirm the applicable deposit procedure
For payments made on or after 1 October 2026, eligible resident individual and HUF buyers may use Form 141, Schedule E, without obtaining a TAN.
Step 4: Check whether a lower deduction certificate is available
If the NRI seller intends to apply for a lower deduction certificate, the buyer should ensure that the certificate is issued before the relevant payment is released.
Step 5: Maintain documentation
The buyer should preserve the sale agreement, payment details, seller’s PAN, residential status confirmation, TDS deposit evidence and the certificate issued to the seller.
These records can be useful in establishing compliance in the event of any future enquiry.
8. A Welcome Relief for One-Time Property Buyers
The removal of the TAN requirement is a practical and taxpayer-friendly reform.
For an ordinary individual purchasing property from an NRI, the earlier process involved a separate registration, tax deposit, quarterly reporting and certificate issuance.
The new mechanism enables eligible buyers to complete TDS compliance using their PAN through the prescribed form.
This is particularly beneficial for one-time buyers who do not otherwise undertake TDS-related activities.
However, the reform should not create a false sense of security. TDS on payments to non-residents continues to be a specialised compliance area, and mistakes may expose the buyer to interest, penalties and other consequences under the law.
Conclusion: Procedural Simplification, Not Tax Exemption
The CBDT’s Income-tax (Fifth Amendment) Rules, 2026, notified vide Notification No. 121/2026 dated 22 September 2026, bring significant relief to resident individual and HUF buyers purchasing immovable property from non-residents.
From 1 October 2026, eligible buyers are no longer required to obtain a TAN and can deposit TDS through Form 141, Schedule E, using their PAN. The TDS certificate is issued in Form 132.
The relaxation is restricted to resident individuals and HUFs. Companies, firms and other buyers continue to follow the TAN-based procedure.
The deduction obligation remains intact, and the residential status of the seller continues to be the determining factor.
The message is clear: Buying property from an NRI has become procedurally simpler, but TDS compliance remains essential.
A little planning before signing the agreement can prevent substantial tax complications later.
– Buying Property from NRI 2026
– NRI Property TDS Rules 2026
– TAN Exemption for NRI Property Purchase
– Form 141 Schedule E
– Form 132 TDS Certificate
– NRI Property Sale TDS
– Section 393(2) Income-tax Act 2025
– Section 195 TDS on NRI Property
– CBDT Notification 121/2026
– TDS on Property Purchased from NRI
– Lower TDS Certificate Form 128
– Income-tax Fifth Amendment Rules 2026
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Buying Property from an NRI? No TAN Required for Individuals & HUFs from 1 October 2026!
The copy of the Notification is as under:
