TDS on Property Purchase From NRI

New Rule From October 1, 2026 Explained

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Quick Answer

From October 1, 2026, if you are a resident Indian buying property from an NRI, you no longer need a separate TAN to deduct and report tax. You can use your PAN instead . You report the deducted tax through a new form called Form 141 , which includes a section called Schedule E. Under the Income-tax Act, 2025, this falls under Section 393(2) , while Section 397(1)(c)(iii) gives individual and HUF buyers a TAN exemption. The tax duty stays the same — you must still cut and deposit TDS.

Only the paperwork has become simpler and lighter.

Buying a home is one of the biggest moments in your life. You save for years, you dream about it, and finally the day comes when you can call a place your own. So when that home belongs to an NRI seller, there's a lot riding on getting the paperwork right.

This article tells you exactly what changed, what stayed the same, and what you need to do — step by step — so you can close your deal with confidence. Whether you're a first-time buyer, a growing family, or a small investor, you'll find clear, practical answers here.

Let's walk through it together, slowly and simply.

TL;DR

Quick Summary: The New Rule for Buying Property From an NRI

Here's the whole story in a handful of easy points:

Start date: October 1, 2026.

Who it helps: Resident individuals and HUFs (a family group treated as one taxpayer).

The big change: You can now use your PAN instead of TAN when buying property from an NRI.

The new form: You report the tax through Form 141, with a section called Schedule E.

The legal home: This sits under Section 393(2) of the Income-tax Act, 2025.

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What stays the same: You still have to cut and deposit TDS. Only the paperwork got lighter.

What Is the New Rule for Buying Property From an NRI?

Think of it this way. Earlier, buying a home from someone living abroad felt like filling out forms built for big companies. Confusing. Heavy. A little scary. Now it feels much closer to a normal, everyday property deal.

Let's clear up two words first, so nothing feels like jargon.

TDS

TDS means Tax Deducted at Source. It's a small slice of the payment that you, the buyer, cut and hand over to the government on the seller's behalf.

NRI

NRI means Non-Resident Indian — a person of Indian origin who lives outside the country.

Simple so far? Good. Let's keep going.

01 The Shift From TAN to PAN

A TAN is a special number that businesses use to deduct and deposit tax. Getting one felt like extra homework for someone who just wanted to buy one home. A PAN, on the other hand, is the tax number you already carry in your pocket.

That's the heart of this change. Your existing PAN is now enough — no new registration, no company-style headache, and no separate TAN application to worry about.

02 Form 141 and Schedule E: The New, Simpler Path

Form 141 is the new paper where you report the tax you cut from the seller's payment. Tucked inside it is Schedule E — the section that records the details of buying a home from someone living abroad.

Together, they work like a "challan-cum-statement." That's a plain way of saying one paper does two jobs at once: it pays the tax and reports the deal. For any NRI property transaction after October 1, 2026, this is your new compliance path.

03 Why the CBDT Made This Change

The CBDT (Central Board of Direct Taxes) shapes India's income tax rules. It noticed a real struggle — ordinary buyers wrestling with rules built for corporations.

So it eased the weight. The goal is practical: help everyday people follow the law without stress, confusion, or one more trip to a tax office.

Old Rule vs New Rule: What Changed on October 1, 2026

Here's a quick side-by-side look, so you can see the shift at a glance.

Point	Before Oct 1, 2026	From Oct 1, 2026
Number needed	TAN was required	PAN can be used
Reporting form	Regular TDS return process	Form 141 with Schedule E
Difficulty level	Heavy, company-style work	Simple, one-paper filing
Duty to cut TDS	Compulsory	Still compulsory

The message is clear. The tax duty hasn't gone anywhere. Only the hard part — the TAN registration and the heavy filing — has been swapped for something you can actually handle on your own.

Who Does This New Rule Apply To?

This relief isn't for everyone, and that's okay. It was built for the common home buyer, not for large businesses. Let's see if you're on the list.

Eligible Buyer

Resident Individuals

If you're a resident Indian buying a flat, a house, or a shop from an NRI, this rule is for you. You use your PAN and skip the TAN — whether you're buying your very first home or quietly adding one more to your name.

Eligible Buyer

Hindu Undivided Families (HUFs)

An HUF is a family group treated as one taxpayer under Indian law. If your HUF is buying property from an NRI seller, it gets this benefit too. The HUF can use its PAN and follow the same simpler Form 141 path.

Seller Condition

When the Seller Is a Non-Resident

The rule only applies when the seller lives abroad for tax purposes. That's why a deal with a non-resident seller works differently from a regular property transaction.

Before you pay a single rupee: always confirm whether your seller is a resident or a non-resident.

Important

What Has NOT Changed for NRI Property Deals

This is the part worth reading twice. Some people wrongly believe the tax has been removed. It hasn't. Let's clear the air.

TDS Is Still Compulsory

You still have to cut TDS from the seller's payment. This is a break on paperwork, not a free pass on tax. Whether the deal is small or big, the duty stays with you, the buyer.

FEMA Rules on Property Types Stay the Same

FEMA is the law that watches over foreign money and property matters in India. Under FEMA, an NRI can freely buy homes and shops without any special permission from the RBI. But an NRI still cannot buy:

Farming land (agricultural land)
Plantation property
A farmhouse

The one exception: when such property reaches them through inheritance or as a gift.

Payments Still Go Through Proper Bank Channels

Money in these deals must travel through proper banking channels. That usually means NRE, NRO, or FCNR accounts — the special bank accounts NRIs use in India. Cash-in-hand shortcuts have no place here.

6 Simple Steps

Step-by-Step Guide: How to Handle TDS on Property Purchase From NRI

Here's your simple, do-this-next roadmap. Follow these six steps in order, and you'll stay firmly on the safe side.

Step 1 — Check the Seller's Tax Status

First, ask the seller one honest question: are you a resident or a non-resident for tax purposes? Get the answer in writing if you can. This single reply decides which rule you follow, so don't skip it.

Step 2 — Find Out the Correct TDS Rate

Next, figure out how much tax to cut. The rate depends on whether the seller's gain is long-term or short-term. If the seller holds a "lower deduction certificate" from the tax office, you may cut less. A tax expert can confirm the exact number for your case.

Step 3 — Cut the TDS Before You Pay

This is the step that matters most. Cut the TDS first, then pay the balance to the seller. Never hand over the full amount and plan to sort out tax later. Cut first, pay second — always in that order.

Step 4 — Report and Deposit Using PAN via Form 141

Now use your PAN to deposit the tax and report the deal through Form 141 and Schedule E. When you fill the challan or return, use tax code 1057 for this type of payment. No TAN needed — one form handles both the payment and the record.

Step 5 — Keep Your Challan and Papers Safe

Save every document — the challan (your payment proof), the deal papers, and your filing record. Keep them in one folder, digital or physical. If a question pops up later, these papers become your quiet shield.

Step 6 — Give the Seller Their TDS Proof

Finally, share the tax deduction proof with the seller. It shows them the tax on their sale has reached the government safely. It keeps the whole deal clean, clear, and fair for both of you.

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Important to Know

Risks of Getting NRI Property TDS Wrong

A little care today saves a mountain of worry tomorrow. Here's what can go wrong if the rules get skipped.

The buyer carries the responsibility for handling the TDS correctly, so timing and the correct deduction matter.

Cutting Too Little or Nothing at All

If you cut less than needed, or nothing at all, the tax office can come knocking on your door. The gap doesn't just disappear. It sits on your name until it's paid.

Late Deposit and Extra Interest

Deposit the tax late, and interest starts stacking up. What began as a small amount can slowly grow into a bigger one. Paying on time keeps your cost low and your peace of mind high.

Penalties and Buyer Liability

Here's the honest truth: the buyer carries the main risk. If the tax isn't handled right, the department can recover the shortfall from you — along with interest and penalty. So give this duty the same care you give the deal itself.

Simple rule: deduct correctly, deposit on time, and keep the proof safely with your property papers.

Legal Basis

Legal Basis Under Income-tax Act, 2025

You don't need to be a lawyer to understand where this rule comes from. Here's the plain version.

The Income-tax Act, 2025 reorganized the old, scattered rules into cleaner umbrella sections. A few of them matter directly to you when you buy property from an NRI.

Section 393(2)

Section 393(2) is the new home for this tax. It replaces the old Section 195, which used to cover TDS on payments to non-residents. It applies to "any interest or other sum" (other than salary) paid to a non-resident — and that includes what you pay for their property.

Section 397(1)(c)(iii)

Section 397(1)(c)(iii) is the part that gives you the real relief. From October 1, 2026, it frees individual and HUF buyers from needing a TAN. You can complete the full process using just your PAN through Form 141.

Tax Code 1057

Tax code 1057 is the code you enter on the challan or return for this kind of payment. Using the right code keeps your filing clean and error-free.

Reporting Form 141

Form 141 with Schedule E is the reporting form itself — one paper that pays the tax and records the deal together.

Whether you're a first-time buyer feeling nervous, a family closing a long-planned deal, or a careful investor double-checking every step, the law now stands beside you in simpler shoes.

TDS Refund

What If TDS Was Deducted and You Want a Refund?

Here's something many buyers don't realize. If TDS was deducted from the NRI seller's payment and the seller is eligible for a refund of that tax, the way to claim it is through an ITR (Income Tax Return) filing. The deducted amount shows up in the seller's tax record — and filing the ITR is what unlocks the refund.

Easy Return

Don't Leave Your TDS Refund Unclaimed

This is where Easy Return can genuinely help. Easy Return specializes in ITR filing, so you don't miss your refund or make an error that causes delays. Whether you're filing for the first time or simply want a trusted hand to make sure everything is in order, Easy Return is happy to help!

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FAQs

Frequently Asked Questions

Do I need a TAN to buy property from an NRI after October 1, 2026?

No, you don't. From October 1, 2026, resident individuals and HUFs can skip the TAN completely. You simply use your existing PAN instead. This removes one big, confusing step and makes the whole deal far easier for a one-time home buyer like you.

Can I use PAN instead of TAN for an NRI property purchase?

Yes, you can. This is the very heart of the new rule. You use your PAN to cut the tax, deposit it, and report the deal through Form 141. There's no need to register for a separate TAN number anymore. Your regular tax number is enough.

What is Form 141 in a property purchase from an NRI?

Form 141 is the new paper where you report the tax you cut from the NRI seller's payment. It works as a "challan-cum-statement," which means it pays the tax and records the deal at the same time. It's designed to make the whole process simpler for you.

Is the 1% TDS rule the same when buying property from an NRI?

No, the simple 1% rule is only for buying from a resident seller. When your seller is an NRI, the rate is different and usually higher. It depends on the type of capital gain. Always check the correct rate, or ask a tax expert, before you pay.

Has TDS been removed on property bought from a non-resident?

No, TDS has not been removed. This is a common mix-up worth clearing. The tax duty is fully alive. You must still cut and deposit the tax. Only the paperwork got lighter, because you can now use PAN instead of TAN. The tax itself stays.

Does this new rule apply to companies and firms?

No, this relief is meant for resident individuals and HUFs. Companies and firms aren't covered by the PAN-based Form 141 path here. They follow their own separate rules. So think of this simpler route as a gift for the everyday buyer, not for large business entities.

What is Schedule E in Form 141?

Schedule E is a section sitting inside Form 141. It's where you record the details of buying property from a non-resident seller. Think of it as the dedicated page for NRI deals — it keeps all the transaction details neatly in one clear place.

Conclusion: Buying a Home From an NRI Just Got Easier

A home is so much more than bricks and beams — it's safety, it's pride, and it's the place where your family's story grows. And now, the path to that home feels a little lighter.

Whether you're signing your very first sale deed, closing a long-awaited deal, or helping your family settle into a dream address, this new rule walks beside you. Hold onto three simple truths:

PAN replaces TAN

Form 141 handles the reporting

Your duty to cut TDS still stays

Take it one calm step at a time, keep your papers safe, and check the latest official notification before you sign. You've got this!

Disclaimer: This article is for general information only and is not tax or legal advice. Tax rules can change and can differ from case to case. Please check the latest official notification or speak with a qualified tax expert before making any decision.

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