Buying Property From an NRI? New TDS Rule From October 1, 2026 Makes Compliance Easier

Buying a house or plot from an NRI can involve more tax-related paperwork than a normal property transaction. One of the important requirements concerns Tax Deducted at Source, or TDS, which the buyer has to handle when purchasing immovable property from a non-resident seller.

Now, a major procedural change is coming into effect from October 1, 2026.

The Central Board of Direct Taxes (CBDT) has changed the TDS reporting mechanism for eligible resident individuals and Hindu Undivided Families (HUFs) purchasing immovable property from non-resident sellers. Under the new system, eligible buyers will be able to use their PAN instead of obtaining a separate TAN for the relevant TDS reporting.

The change is expected to reduce paperwork for people who may otherwise need a separate tax account number for a single property transaction.

However, buyers should be clear about one thing: the new rule simplifies reporting, but it does not remove the TDS obligation.

Buying Property From an NRI? New TDS Rule From October 1, 2026 Makes Compliance Easier

Why Was a Change Needed?

TDS compliance can become complicated when a resident buyer purchases property from an NRI.

Under the earlier system, a resident individual or HUF could be required to obtain a Tax Deduction and Collection Account Number (TAN) for carrying out the relevant TDS-related compliance.

For someone who regularly handles tax deductions, having a TAN may be routine. But for an individual buying a home for personal use, obtaining a separate TAN for a single property transaction could mean additional paperwork and another administrative step.

The new mechanism is intended to address this issue.

From October 1, eligible buyers will be able to complete the relevant TDS reporting using their existing PAN through the prescribed process.

What Exactly Changes on October 1?

The key change relates to the reporting mechanism, rather than the underlying tax liability.

A resident individual or HUF purchasing immovable property from an NRI will no longer have to obtain a separate TAN for the relevant reporting, provided the buyer falls within the category covered by the new provisions.

Instead, the buyer will be able to use their PAN for the prescribed TDS challan-cum-statement process.

This could make the compliance process more convenient, particularly for one-time property buyers.

The change relates to payments covered under Section 393(2) of the Income-tax Act, 2025.

Buyers Will Still Have to Deduct TDS

This is perhaps the most important point for property buyers.

The removal of the separate TAN requirement does not mean that buyers can stop worrying about TDS.

If TDS is applicable to the transaction, the buyer will still have to:

  • Calculate the applicable TDS correctly

  • Deduct the required amount

  • Deposit the TDS within the applicable timeline

  • Report the transaction through the prescribed mechanism

  • Maintain relevant records

In other words, the government has changed how eligible buyers can report the transaction, not removed their tax-compliance responsibilities.

Therefore, buyers should not treat the new rule as a tax exemption.

Form 141 Will Become Important

Under the new arrangement, eligible buyers will be able to use Form 141, a challan-cum-statement, to report and deposit the applicable TDS.

Instead of dealing with separate steps involving a TAN, the buyer will be able to use the prescribed form with their PAN.

The form will require important information relating to the property transaction.

This can include details concerning the buyer, the NRI seller, the property, the payment, TDS and relevant capital-gain information.

Because the seller's information forms an important part of the reporting process, buyers should collect the seller's PAN and other necessary tax details well before completing the transaction.

Seller's PAN and Residential Status Matter

When purchasing property from an NRI, the buyer should not treat the seller's tax status as a minor detail.

The seller's PAN and non-resident status are important for determining the applicable tax compliance.

Before making the relevant payment, buyers should ensure that the information provided by the seller is accurate.

Incorrect information can create problems during TDS reporting and may result in additional compliance requirements.

For this reason, property buyers should keep copies of relevant documents and transaction records.

What About Capital Gains?

The tax treatment of a property sold by an NRI can also involve capital gains.

The new reporting process requires relevant information concerning the nature of the capital gain associated with the transaction.

Depending on the applicable provisions and facts of the transaction, the gain may be treated as a short-term or long-term capital gain.

This is another reason why buyers should not approach the transaction as a simple property purchase with only the sale price to consider.

The tax details connected with the NRI seller can affect the TDS compliance that the buyer has to complete.

Where the transaction involves substantial value or complicated circumstances, professional tax advice can help ensure that the reporting is completed correctly.

What If the Property Has Multiple Buyers?

Joint purchases require additional attention.

If two or more people are buying the property together, buyers should not automatically assume that one filing will cover everyone.

Under the new reporting arrangement, each buyer may have to complete separate reporting requirements and file a separate Form 141, depending on the applicable circumstances.

For example, if three individuals jointly purchase a property from an NRI, each person's PAN and other required details may need to be considered separately.

Joint buyers should therefore clarify their individual responsibilities before making payments.

What Should Buyers Do Before October 1?

Anyone planning to purchase property from an NRI around or after the October 1 implementation date should prepare the required information in advance.

The first step is to ensure that the buyer's PAN details are correct.

The buyer should also collect the seller's PAN and verify the seller's tax-residency status.

Property documents and payment details should be kept properly organised. Buyers should also determine the applicable TDS requirements before making the relevant payment rather than waiting until after the transaction.

For joint purchases, the PAN and information of every buyer should be kept ready.

It is also advisable to maintain records of the amount paid to the seller, the amount deducted as TDS and the date on which the tax was deposited.

Will Property Registration Rules Change?

The new TDS reporting change should not be confused with the normal property-registration process.

The change primarily concerns TDS compliance and reporting for eligible transactions involving NRI sellers.

It does not, by itself, introduce a new property-registration system or change the basic process for transferring ownership of a house, flat or plot.

Buyers will still have to complete applicable requirements involving agreements, stamp duty, registration and other property-related documentation.

A Smaller Paperwork Burden for Buyers

The new rule is significant because it addresses an administrative issue faced by individuals purchasing property from non-resident sellers.

For eligible resident individuals and HUFs, being able to use PAN instead of obtaining a separate TAN can remove one additional step from the transaction.

That can make the TDS process easier to manage, particularly for people who are not normally involved in tax-deduction procedures.

But the convenience comes with the same responsibility to comply with the applicable TDS rules.

The Bottom Line

From October 1, 2026, eligible resident individuals and HUFs purchasing immovable property from NRI sellers will be able to use their PAN for the prescribed TDS reporting process instead of obtaining a separate TAN.

The change can reduce paperwork and make compliance more convenient.

However, buyers must still correctly handle the TDS applicable to the transaction. They will need to provide accurate details about themselves, the seller, the property, payments and other information required through Form 141.

Those planning such a purchase should therefore prepare the seller's PAN, residential-status information, property documents and payment details in advance.

The new system may make the paperwork simpler, but careful TDS compliance will remain an essential part of buying property from an NRI.

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