6 days ago
NRI Property Purchases: TAN Rules Change October 1, 2026
When someone in India buys property from an NRI, the buyer must deduct tax from the payment.
Unlike a purchase from a resident seller, there is no ₹50 lakh minimum before this tax applies.
Until September 30, 2026, eligible individual and HUF buyers must obtain a TAN to report and deposit the tax.
From October 1, 2026, they can use their PAN instead.
The tax obligation and rates will not change.
Without a lower-tax certificate, the tax may be calculated on the full sale price.
A lower or nil deduction certificate can reduce the amount withheld, but it does not remove the TAN requirement before October 1.
Buyers must deposit the tax on time and keep documents that registration offices may request.
Companies, firms and LLPs will still need a TAN.
TAN remains mandatory for eligible resident individual and HUF buyers until September 30, 2026.
From October 1, 2026, eligible resident individuals and HUFs can report and deposit TDS using PAN instead of TAN.
Companies, firms and LLPs buying property from an NRI will continue to require TAN.
TDS applies from the first rupee on property purchases from NRI sellers, with no ₹50 lakh threshold.
Without a lower-deduction certificate, withholding may be 12.5% for property held over 24 months or applicable slab rates for shorter holdings, plus surcharge and cess.
- Who
- Resident individuals and Hindu Undivided Families buying Indian immovable property from NRI sellers; companies, firms and LLPs are also covered by the TAN rules.
- What
- The TAN requirement for eligible resident individual and HUF buyers will be replaced by PAN-based TDS reporting from October 1, 2026.
- Where
- Transactions involving immovable property in India.
- When
- TAN remains mandatory through September 30, 2026; the new PAN-based process begins October 1, 2026.
- Why
- The change is intended to remove a burdensome, often one-time TAN registration process while keeping the buyer’s TDS obligation unchanged.
Simplified compliance
Remaining compliance burden
Effect of the 2026 change
Simplified compliance
Amit Prakash and Parag Jain describe the PAN-based system for eligible individuals and HUFs as relief from applying for a separate TAN for what may be a one-time purchase.
Remaining compliance burden
The change removes only the TAN registration requirement; buyers must still deduct, deposit and report TDS, while companies, firms and LLPs remain subject to TAN requirements.
Timing and transaction planning
Simplified compliance
If a sale is flexible, completing it after October 1, 2026 may simplify the buyer’s reporting process.
Remaining compliance burden
Sales before that date may require TAN registration, Form 144 filing and, where applicable, a lower-deduction certificate, so experts recommend beginning preparations six to eight weeks before registration.
Amount withheld
Simplified compliance
A lower or nil deduction certificate can help align withholding more closely with the seller’s actual tax liability.
Remaining compliance burden
Without such a certificate, the buyer may have to withhold tax on the entire sale consideration, even when the seller’s actual capital gain is much smaller.
Key facts
- TAN deadline
- Eligible resident individual and HUF buyers must use TAN for NRI-property TDS until September 30, 2026.
- New process
- From October 1, 2026, eligible resident individuals and HUFs can deposit and report TDS using PAN-based challans.
- Businesses
- Companies, firms and LLPs buying property from an NRI will continue to require TAN.
- TDS threshold
- There is no ₹50 lakh threshold for purchases from NRI sellers; TDS applies from the first rupee.
- Long-term rate
- Without a lower-deduction certificate, the stated rate is 12.5% plus surcharge and cess where the property was held for more than 24 months.
- Short-term rate
- For property held for 24 months or less, deduction is made at the NRI seller’s applicable slab rates, plus surcharge and cess.
- Deposit deadline
- TDS must be deposited within seven days from the end of the month in which it is deducted.
Quotes
Neeraj Agarwala
Senior Partner at Nangia & Co LLP
“Accordingly, many states' sub-registrar offices insist on proof of payment of TDS either in the form of TDS Certificate, in case of lower deduction or no deduction, or TDS challan or both. The idea is to ensure that the requisite TDS has been discharged by the buyer.”
businesstoday.in
Sources
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