Buying property from an NRI? TAN is mandatory until September 30, 2026; Know TDS rules and what changes from October 1

The requirement for resident individuals and HUFs buying immovable property from an NRI to obtain a Tax Deduction Account Number (TAN) will end from October 1, 2026. However, the tax obligation itself will not change. Buyers will still have to deduct and deposit TDS, but they will be able to use their PAN for the process instead of first obtaining a TAN.

According to Amit Prakash, CBO, Urban Money, from October 1, resident buyers purchasing property from NRI sellers will be able to deposit TDS through a PAN-based challan, similar to the mechanism already used for resident-to-resident property transactions. The obligation to deduct tax remains with the buyer; what changes is the account number used for reporting.

CA Parag Jain, Tax Head at 1 Finance, said the Finance Bill 2026 amends Section 397(1)(c) of the Income Tax Act, 2025 to exempt resident individuals and HUF buyers from obtaining a TAN when purchasing immovable property from a non-resident seller. The relief, however, does not extend to companies, firms or LLPs buying property from an NRI, which will continue to require a TAN.

Until September 30, 2026, obtaining a TAN is mandatory for resident individuals buying property from an NRI. Jain said the applicable route is Form 144, the renumbered Form 27Q, which is a quarterly return filed through the TIN-Protean utility and cannot be filed without a TAN.

The difficulty, according to Jain, is that the compliance structure was designed for regular tax deductors such as employers and businesses. A buyer purchasing a house may have only a one-time TDS obligation, yet still has to apply for a TAN, wait for its allotment and file the required quarterly return.

Prakash said that for a one-time property purchase, this can involve several additional compliance steps, including filing forms, waiting for processing and obtaining an account number that the buyer may never need again.

From October 1, 2026, that additional registration requirement will be removed for eligible resident individual and HUF buyers. The tax rates and liability, however, will remain unchanged.

There is no ₹ 50 lakh threshold for TDS when a resident buyer purchases property from an NRI seller.

Jain said this is one of the biggest differences between transactions involving resident and non-resident sellers. For a resident seller, TDS generally applies where the consideration or stamp duty value is ₹ 50 lakh or more, at 1% of the consideration.

For a non-resident seller, however, TDS applies from the first rupee. Jain said that a ₹ 30 lakh property bought from an NRI attracts deduction, whereas the same property bought from a resident seller would not attract TDS if it remains below the applicable ₹ 50 lakh threshold.

The rate and amount of deduction are also different. In an NRI transaction, the tax is linked to the seller's capital gain, but the buyer cannot simply assume the amount of capital gain.