Income Tax: Buying property from an NRI gets easier from October 1; what changes for buyers

Buying an immovable property from a non-resident will become simpler for resident individuals and Hindu Undivided Families (HUFs) from 1 October 2026, with the Income Tax Department removing the requirement to obtain a Tax Deduction and Collection Account Number (TAN) for deducting tax at source (TDS).

The change is part of the transition to the new income-tax law and is aimed at simplifying TDS compliance for property buyers dealing with non-resident sellers.

Under the existing rules, a resident individual or HUF purchasing an immovable property from a non-resident is required to deduct TDS and obtain a TAN for the transaction. This adds an additional compliance step for an individual buyer who may otherwise have limited exposure to TDS procedures.

The Income Tax Department, in its Budget 2026 FAQs, said this requirement will be removed from 1 October 2026. Buyers will instead be able to use their Permanent Account Number (PAN) for reporting and depositing the TDS.

This brings the compliance process closer to the one followed when an individual buys property from a resident seller.

From October, the buyer will report the transaction through the new PAN-based challan-cum-statement mechanism rather than obtaining a separate TAN.

The Income Tax Department has provided for Form 141, which is used for furnishing a challan-cum-statement for tax deducted under the new income-tax framework. The form includes provisions for TDS on the transfer of immovable property.

For an individual buying property from an NRI, this means the buyer will no longer have to separately obtain a TAN merely to comply with the TDS requirement on that transaction.

The change is particularly relevant because property transactions involving non-residents can otherwise involve additional compliance compared with transactions between two resident parties.

The change does not mean that TDS on a property bought from a non-resident seller has been removed. The tax deduction obligation continues to apply; what changes is the manner in which the buyer complies with the requirement.

Buyers will therefore still need to determine the applicable TDS, deduct it at the appropriate stage and deposit and report it using the prescribed mechanism.

The Income Tax Department's Budget 2026 FAQs specifically state that the relaxation will apply from 1 October 2026. The department has also issued guidance on Form 141 and the broader TDS compliance framework under the new income-tax law.

For buyers planning to purchase property from an NRI around the transition date, the timing is therefore important. Transactions covered by the new provisions from 1 October will follow the revised PAN-based compliance process, reducing the paperwork associated with obtaining and maintaining a separate TAN for the transaction.

Kirti Jha is a Senior Content Producer at Mint, where she writes on mutual funds, taxation, personal finance and macroeconomic developments. Her reporting focuses on helping readers understand complex financial developments through data-driven, research-backed stories that explain how policy changes, market trends and regulatory decisions affect investors and households.