Buying Property from an NRI? TAN Relief Starts—but TDS Still Applies
A simpler PAN-based reporting process applies from 1 October 2026. Buyers should understand exactly what changed—and what did not.
The biggest misunderstanding
“TAN not required” does not mean “TDS not required”. The buyer must still calculate the applicable TDS correctly, deduct it, deposit it, report the transaction and provide the TDS certificate.
What has changed?
PAN-based reporting
The specified resident individual or HUF buyer can use the new challan-cum-statement route without obtaining TAN only for this purpose.
New Form 141 Schedule E
Schedule E captures the property, buyer, non-resident seller, consideration, capital-gain and TDS details.
Form 132 certificate
The prescribed TDS certificate framework has also been updated for property transferred by a non-resident.
What the buyer must not assume
| Wrong assumption | Correct approach |
|---|---|
| No TAN means no TDS. | Only the reporting mechanism is simplified. TDS obligations continue. |
| Every property purchase attracts flat 1% TDS. | Do not copy the resident-seller rule. The seller’s non-resident status and applicable provisions must be examined. |
| TDS can be checked after registration. | Complete the tax review before making or crediting the payment. |
| One filing is enough for all buyers. | Where there is more than one deductor, each deductor has to file separately. |
Last-minute buyer checklist
Before releasing the property payment, confirm:
- The residential status of every seller
- PAN of the buyer and seller, wherever available
- Seller’s foreign address, email and contact details
- Tax Residency Certificate and foreign tax identification details, where relevant
- Agreement date, registration date and complete property address
- Sale consideration and stamp-duty value
- Whether payment is lump sum or in instalments
- Share of every buyer and seller
- Correct TDS rate, including applicable surcharge and cess
- Any lower or nil deduction certificate and its validity
- Previous payment and acknowledgement details for instalment transactions
One practical example
Suppose two resident individuals jointly purchase a flat from a non-resident seller. They should not simply deduct 1% or make one combined filing. The seller’s tax position, each buyer’s share, applicable deduction and separate reporting requirement should be examined before payment.
What professionals commonly miss
- Incorrectly treating the seller as resident based only on an Indian address or PAN
- Applying the resident-property TDS rule without examining non-resident provisions
- Ignoring surcharge and cess while calculating the deduction
- Mismatch between agreement, payment, stamp-duty and registration information
- Missing separate reporting where there are multiple buyers
- Failing to verify the scope and validity of a lower-deduction certificate
- Paying the full amount before deciding the correct TDS treatment
How Gururaaja Sanjay and Co can assist
We can review the seller’s residential status, transaction documents, applicable TDS, lower-deduction certificate and reporting information before the payment is released. A timely review can reduce avoidable mismatches and correction work.
Planning to buy property from an NRI?
Get the TDS position reviewed before making payment.
Call 7760252581 WhatsApp UsGeneral educational information based on CBDT Notification No. 121/2026 dated 22 September 2026. Tax treatment depends on the facts, residential status and documents of each transaction. Obtain professional advice before acting.
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