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TDS on Property Purchase From NRI
New Rule From October 1, 2026 ExplainedGet Expert TDS Assistance
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Quick Answer: New NRI Property TDS Rule
From 1 October 2026, a resident individual or resident Hindu Undivided Family (HUF) purchasing immovable property from a non-resident seller is no longer required to obtain a separate TAN solely for the covered TDS transaction . The eligible buyer can use their PAN to deduct, pay and report the applicable TDS through Form 141, Schedule E.
Buying property from a Non-Resident Indian (NRI) involves more than checking ownership documents and completing the sale deed. As the buyer, you may also be responsible for deducting, depositing and reporting TDS on payments to the non-resident seller.
Earlier, even an individual purchasing property for personal use generally had to obtain a Tax Deduction and Collection Account Number (TAN) to comply with non-resident property TDS requirements.
From 1 October 2026, an eligible resident individual or resident HUF buyer can use PAN-based compliance through Form 141, Schedule E for qualifying property purchases from non-resident sellers, without obtaining TAN solely for that covered transaction.
This change simplifies the reporting process, but it does not remove the buyer's obligation to deduct applicable TDS. The seller's capital gains tax calculation and the buyer's withholding responsibility must also be considered separately. For the seller-side rules, read our guide on TDS on sale of property by NRI.
Quick Summary: New Rule for Buying Property From an NRI
Six important things property buyers should know about the October 2026 PAN-based TDS compliance change.
The new PAN-based NRI property TDS reporting facility applies from 1 October 2026 .
Resident individuals and resident Hindu Undivided Families (HUFs) purchasing qualifying immovable property from a non-resident seller.
Eligible buyers can use their PAN without obtaining a separate TAN solely for the covered transaction.
TDS payment and reporting are completed through Form 141, Schedule E using the Income Tax Department's PAN-based e-Filing facility.
TDS on relevant payments to the non-resident seller falls under Section 195 (Now Section 393(2)). The TAN exception for qualifying buyers is provided under Section 397(1)(c)(iii) .
The buyer must still deduct, deposit and report applicable TDS. The new rule simplifies compliance; it does not remove or automatically reduce the tax deduction.
Important: Companies, firms and other ineligible buyer categories must continue using the applicable TAN-based TDS compliance process. The simplified Form 141 Schedule E facility is specifically intended for eligible resident individual and resident HUF purchasers.
What Is the New Rule for Buying Property from an NRI?
From 1 October 2026, eligible resident individuals and resident Hindu Undivided Families (HUFs) can use a simpler PAN-based reporting process when buying immovable property from a non-resident seller.
Before 1 October 2026, a resident individual or HUF purchasing property from a non-resident seller generally needed a Tax Deduction and Collection Account Number (TAN) to deduct, deposit and report applicable TDS.
The new provision removes the need to obtain a separate TAN solely for this qualifying transaction. Instead, eligible buyers can use their Permanent Account Number (PAN) and submit Form 141, Schedule E through the Income Tax e-Filing portal. The obligation to deduct the correct amount of tax continues.
What Does TDS Mean?
Tax Deducted at Source is tax withheld from certain payments and deposited with the government on behalf of the payee. When buying property from a non-resident, the buyer is responsible for deducting applicable TDS and complying with reporting requirements.
Who Is Considered an NRI?
NRI means Non-Resident Indian. For tax deduction, the seller's residential status under Indian income-tax law is critical. Citizenship, passport or overseas address alone does not determine which property TDS provision applies.
PAN Instead of TAN for Eligible Buyers
Previously, resident individual/HUF purchasers generally had to obtain TAN to meet TDS obligations for payments to non-resident property sellers.
From 1 October 2026, qualifying resident individual/HUF buyers can meet the prescribed compliance requirements through a PAN-based Form 141 Schedule E process.
Form 141 Schedule E: The New Reporting Process
Form 141 is a consolidated challan-cum-statement for specified TDS transactions.
Its Schedule E covers qualifying transfers of immovable property by a non-resident seller to a resident individual or HUF buyer. The purchaser reports the prescribed transaction details and completes the applicable tax payment and reporting procedure through the e-Filing portal.
What Has Become Easier?
Eligible buyers no longer need to obtain and maintain a separate TAN solely for a qualifying, potentially one-time property transaction.
They can use the existing PAN-based e-Filing system instead of following the older TAN-based statement process for that covered purchase.
However, buyers must still determine the applicable withholding amount, keep supporting records and meet payment and reporting deadlines.
Who Can Use Form 141 Schedule E?
Resident Individuals & Resident HUFs
A qualifying resident individual or resident HUF buying immovable property from a non-resident seller can use Form 141 Schedule E without obtaining TAN solely for the covered transaction.
Companies, Firms & Other Buyers
Buyer categories that do not qualify for Schedule E must follow the applicable TAN-based TDS process. The PAN relaxation does not automatically apply to every resident buyer of NRI-owned property.
Does the New Rule Change the NRI Seller's Capital Gains Tax?
No. The change concerns the eligible buyer's TAN requirement and reporting procedure. It does not independently alter the seller's capital-gains liability or introduce a universal flat TDS rate for NRI property sales.
The amount to be deducted depends on the applicable withholding provisions, income chargeable to tax, rates in force and any valid tax-deduction certificate or determination. The buyer's TDS responsibility and the seller's final income-tax liability should be assessed separately.
Old Rule vs New Rule: What Changed on 1 October 2026?
See how the PAN-based TDS compliance process changed for eligible resident individual and HUF buyers purchasing property from non-resident sellers.
| Comparison | Before 1 October 2026 | From 1 October 2026 |
|---|---|---|
| TAN Requirement |
TAN Required
Eligible buyers generally had to obtain TAN for TDS compliance on non-resident property transactions. |
PAN-Based
Resident individual/HUF buyers can use their PAN without obtaining TAN solely for the covered transaction. |
| TDS Reporting Form | TAN-based reporting through the prescribed TDS statement, including Form 144 for relevant 2026 transactions. | Form 141, Schedule E — the prescribed PAN-based challan-cum-statement for qualifying NRI property transactions. |
| Filing Platform | TAN-based statement filing through the applicable TRACES process. | Income Tax e-Filing portal through the buyer's PAN login. |
| Compliance Process | TAN registration, TDS deposit and the prescribed TAN-based statement filing process. | A consolidated challan-cum-statement process for eligible buyers through Form 141 Schedule E. |
| TDS Deduction Obligation | Applicable TDS had to be deducted on chargeable payments to the non-resident seller. | TDS deduction is still required where applicable. The PAN-based change does not remove withholding obligations. |
| Who Can Use the Process? | Resident individual/HUF purchasers generally followed the TAN-based procedure. | Only qualifying resident individuals and resident HUFs can use the new Schedule E facility. Companies, firms and other buyers follow their applicable TAN-based process. |
What changed? Eligible resident individual and HUF purchasers no longer need a separate TAN solely for a covered property purchase from a non-resident seller. They can complete the prescribed reporting through their PAN using Form 141 Schedule E.
What did not change? Tax deduction remains applicable under Section 195 (Now Section 393(2)), subject to the facts of the transaction. The correct TDS amount, applicable rate, relevant certificate and payment deadline must still be determined. The relaxation is administrative, not a general reduction in NRI property TDS.
Who Does the New NRI Property TDS Rule Apply To?
From 1 October 2026, the PAN-based TDS reporting facility is available to specific categories of buyers purchasing immovable property from a non-resident seller.
Resident Individuals
An individual who is resident in India for income-tax purposes and purchases a flat, house, plot or other qualifying immovable property from a non-resident seller can use their PAN instead of obtaining TAN solely for that transaction. Applicable TDS must still be deducted and reported through Form 141 Schedule E.
Resident Hindu Undivided Families
A resident Hindu Undivided Family (HUF) is recognised as a separate taxpayer under Indian income-tax law. When the HUF purchases qualifying immovable property from a non-resident seller, it can use its HUF PAN and follow the Form 141 Schedule E procedure without obtaining TAN solely for that covered purchase.
Seller Must Be a Non-Resident
The new Schedule E facility applies when the property is transferred by a seller who is non-resident under Indian income-tax law. The seller's citizenship, overseas address or passport alone does not determine their tax-residential status. Confirm that the payment falls under the applicable non-resident TDS provisions before choosing Schedule E.
Before making a property payment: Verify both the buyer's residential status and category and the seller's tax-residential status. These determine whether the PAN-based Form 141 Schedule E process is available.
Who is excluded? Companies, partnership firms, LLPs and other buyer categories outside the eligible resident individual/HUF group must use the applicable TAN-based compliance process. The TAN relaxation does not eliminate their TDS obligations.
What Has NOT Changed for NRI Property Transactions?
The October 2026 update simplifies TAN-related compliance for eligible buyers. It does not remove TDS obligations or change the underlying FEMA rules for property transactions.
1. TDS on NRI Property Payments Is Still Required
The new rule removes the separate TAN requirement for eligible resident individual and resident HUF buyers. It does not remove the obligation to deduct applicable TDS on payments to a non-resident seller.
Under Section 195 (Now Section 393(2)), tax must be withheld from sums chargeable to tax in India, as applicable. The buyer must determine the correct deduction and comply with the payment and reporting rules.
2. FEMA Property Restrictions Remain Applicable
The Foreign Exchange Management Act (FEMA) framework continues to regulate how non-residents may acquire or transfer property in India.
NRIs and eligible OCI cardholders can generally purchase residential and commercial property in India without prior RBI approval under the applicable general permission. However, this general permission does not extend to purchasing:
- Agricultural land
- Plantation property
- Farmhouses
These restrictions concern acquisition by NRIs/OCIs. They do not mean that every resident buyer is prohibited from purchasing such property from an NRI. The transaction must be checked under the applicable transfer rules.
3. Property Payments Must Follow Permitted Banking Channels
Property payments involving a non-resident must continue to follow the applicable FEMA banking and payment rules. The new TAN relaxation does not permit informal cash settlements or unrestricted overseas transfers.
Depending on the nature of the transaction and the non-resident seller's account eligibility, sale proceeds may need to be received or credited through an appropriate authorised banking route, including an eligible NRO account where applicable.
NRE, NRO and FCNR(B) accounts have different permitted uses. They should not be treated as interchangeable destinations for every property-sale payment.
Key takeaway: From 1 October 2026, eligible resident individual and HUF buyers can use Form 141 Schedule E without obtaining TAN solely for the covered property transaction. However, correct TDS, lawful property transfer and permitted banking channels remain essential.
How to Deduct and Pay TDS When Buying Property from an NRI
Follow these six steps to understand your TDS obligations, complete Form 141 Schedule E and maintain proper transaction records.
Verify the Seller's Tax Residency
Confirm whether the seller is resident or non-resident under Indian income-tax law. Review their residency declaration, relevant supporting documents and PAN details. Citizenship or an overseas address alone does not establish tax residency.
Also confirm that you are an eligible resident individual or resident HUF purchaser before choosing Form 141 Schedule E.
Determine the Correct TDS Amount
Identify the applicable withholding provision, chargeable sum and rate in force under Section 195 (Now Section 393(2)).
Review the nature of the gain, relevant tax provisions, availability of the seller's PAN and any valid lower/nil deduction certificate under Section 197 (Now Section 395(1)) or determination under Section 395(2). Do not assume that every NRI property purchase attracts a single flat rate.
Deduct TDS at the Correct Time
Deduct the applicable TDS at the earlier of crediting the amount to the seller's account or making payment, as prescribed under Section 393(2).
Review advance payments and instalments as well as the final settlement. Do not pay the entire applicable amount without accounting for required TDS and assume that deduction can always be handled later.
Pay and Report TDS Using Form 141 Schedule E
From 1 October 2026, eligible resident individual and resident HUF buyers can complete the prescribed PAN-based process without obtaining TAN solely for the covered property purchase.
Log in to the Income Tax e-Filing portal using PAN, navigate to e-File → e-Pay Tax → Income-tax Act, 2025 → New Payment → Form 141, and select the applicable Schedule E.
Enter the prescribed buyer, seller and transaction details, verify the TDS amount, and complete payment and statement submission.
PAN-Based Filing — Schedule EMeet Deadlines and Preserve Records
For Form 141 transactions, the Income Tax Department states that deducted tax must be deposited within 30 days from the end of the month of deduction, with the challan-cum-statement filed within one month after that month.
Keep the payment challan, Form 141 acknowledgement, sale agreement, transaction documents, residency evidence and any deduction certificate.
Provide the Seller with TDS Documentation
Share the relevant TDS payment and filing details with the non-resident seller. Download and furnish the prescribed TDS certificate through the applicable TRACES facility when available.
Reconcile the deduction against the transaction records so the seller can verify the reported TDS when preparing their Indian income-tax return.
Important: Form 141 Schedule E is not available to every buyer. Companies, partnership firms and other buyer categories outside the eligible resident individual/HUF group must follow the applicable TAN-based process. The new filing facility does not eliminate TDS or automatically reduce the applicable withholding rate.
Need Help with NRI Property TDS?
Get guidance on withholding, Form 141 Schedule E, tax payment and documentation before completing your property purchase.
Risks of Getting NRI Property TDS Wrong
Incorrect TDS deduction, delayed payment or incomplete reporting can create additional financial and compliance liabilities for property buyers.
Important: The October 2026 PAN-based Form 141 Schedule E facility simplifies reporting for eligible resident individual/HUF buyers. It does not reduce the obligation to deduct the applicable tax correctly and deposit it on time.
1. No TDS or Insufficient Deduction
If a buyer fails to deduct the required tax or deducts less than the applicable amount, the buyer may be treated as an assessee in default under Section 201 (Now Section 398).
The tax shortfall may be recoverable from the buyer, subject to the statutory exceptions and relief available where the seller has already reported and paid the relevant tax.
2. Interest on Delayed TDS
Section 398(3) prescribes interest where tax is not deducted or deposited on time.
1% per month or part-monthApplies to the period from when tax was deductible until it is actually deducted.
1.5% per month or part-monthApplies from the deduction date until the deducted tax is actually deposited with the government.
3. Penalties and Filing Consequences
Failure to comply with applicable TDS requirements may lead to penalty proceedings, late-filing consequences or additional notices, depending on the nature of the default.
These consequences are not automatically identical for every buyer. The relevant legal provisions, facts, procedural safeguards and available relief must be considered.
Incorrect seller PAN, transaction details or Form 141 Schedule E reporting can also create reconciliation difficulties.
How to reduce the risk: Confirm the non-resident seller's tax status, calculate the appropriate withholding amount, deduct tax at the prescribed time, deposit it by the deadline and retain Form 141 acknowledgements, payment challans and supporting property documents. A PAN-based filing facility makes the process simpler, but correct compliance remains essential.
Legal Basis for NRI Property TDS Under the Income-tax Act, 2025
Understand the key sections governing tax deduction, PAN-based filing and lower deduction certificates when purchasing property from a non-resident seller.
From 1 October 2026, the Income-tax framework allows eligible resident individual and resident HUF buyers to use their PAN instead of obtaining a separate TAN for qualifying immovable-property purchases from non-resident sellers. The reporting procedure has changed, but the underlying withholding obligations remain.
TDS on Payments to Non-Residents
Section 195 (Now Section 393(2)) governs tax deduction on specified income and chargeable payments made to non-residents, including applicable property-sale payments.
The relevant provision for non-resident property transactions is Section 393(2), Table Serial No. 17. The tax withheld depends on the amount chargeable, applicable rates in force and any valid certificate or determination.
TDS duty remains applicableTAN Exemption for Eligible Buyers
Section 397(1)(c)(iii) provides relief from obtaining TAN for a resident individual or resident HUF who is required to deduct tax on consideration for the transfer of immovable property by a non-resident.
This relaxation applies to the covered transactions from 1 October 2026. It does not remove TAN requirements for other payments where TAN remains mandatory.
PAN-based complianceForm 141 Schedule E — Challan-cum-Statement
Form 141, Schedule E is the prescribed PAN-based challan-cum-statement used by qualifying resident individual/HUF purchasers to pay and report TDS on eligible property transfers involving non-resident sellers.
It is accessed through the buyer's PAN-based login on the Income Tax e-Filing portal. Schedule E applies from 1 October 2026.
One integrated reporting processLower or Nil TDS Certificate and Determination
Section 197 (Now Section 395(1)) provides for a lower or nil tax deduction certificate where the statutory conditions are met. Such a certificate may affect the rate at which the buyer deducts tax.
Section 395(2) separately deals with determining the appropriate proportion of a payment chargeable to tax in relevant non-resident payment cases. Buyers should review any valid certificate or determination before making payment.
Check certificates before deductionKey takeaway: Section 393(2) establishes the non-resident TDS framework, Section 397(1)(c)(iii) provides eligible buyers with TAN relief, and Form 141 Schedule E enables PAN-based payment and reporting. Section 395 may be relevant where a valid lower/nil deduction certificate or determination applies. These provisions simplify compliance; they do not eliminate the underlying tax liability.
Can an NRI Seller Claim a Refund of TDS Deducted on Property Sale?
If TDS deducted by the property buyer exceeds the NRI seller's final Indian income-tax liability, the seller may be eligible to claim the excess as a refund.
When a resident buyer purchases immovable property from a non-resident seller, applicable TDS is deducted under Section 195 (Now Section 393(2)). That deduction is generally credited against the seller's Indian income-tax liability, subject to the applicable reporting and tax-credit rules.
The NRI seller, not the buyer, generally claims the refund if the total eligible tax credits exceed the final tax payable. The seller needs to calculate the taxable capital gain, account for applicable deductions and exemptions, and file the appropriate Indian income-tax return.
The final tax depends on the seller's actual gain, holding period, acquisition cost and relevant exemptions. For a broader explanation, read our guide to capital gains tax for property.
Calculate Final Tax Liability
Determine the taxable capital gain and apply the relevant exemptions, rates and other tax provisions.
Verify TDS Credit
Check the applicable tax-credit records, including Form 26AS and AIS where relevant. Resolve any mismatch between deducted tax and reported credit.
File the Applicable ITR
Report the capital gain, claim eligible TDS credit and submit the appropriate return. Any excess eligible tax is subject to verification and processing by the Income Tax Department.
Need Help Claiming NRI Property TDS Refund?
Easy Return can assist with capital gains computation, TDS credit reconciliation and ITR filing for eligible property sellers. Get help preparing an accurate return and claiming any refund legally due.
Official References You Can Trust
Rules are best followed straight from the source. Use these official government references to verify the latest requirements.
- CBDT • Income Tax Department Notification No. 121/2026 — Income-tax (Fifth Amendment) Rules, 2026 The official notification effective from October 1, 2026 that extends Form 141 to qualifying NRI immovable-property transactions and inserts Schedule E. ✓ Primary Rule Source ↗
- Income Tax e-Filing Portal Form 141 — Challan-cum-Statement Guidance Official Income Tax Department guidance for accessing and filing Form 141 through PAN login. ↗
- Income Tax Department Income-tax Act, 2025 Official statutory text covering the TDS framework under Section 393 and TAN-related compliance provisions under Section 397. ↗
- CBDT • Income-tax Rules Tax Code 1057 — Section 393(2) Official tax-code table identifying code 1057 for Section 393(2), Table Serial No. 17 payments to non-residents. ↗
- Reserve Bank of India FEMA — NRI Immovable Property Regulations Official RBI regulations covering NRI property ownership, restricted property categories and permitted payment channels. ↗
- Income Tax e-Filing Portal e-Pay Tax & Form 141 Resources Official e-Pay Tax resource page containing Form 141 FAQs and filing guidance. ↗
Frequently Asked Questions
Q 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.
Q 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.
Q 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.
Q 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.
Q 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.
Q 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.
Q 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:
Buying Property From an NRI?
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