Buying Property from an NRI? Four TDS and PAN Changes Coming in 2026 Could Simplify — or Complicate — Your Deal

Property Deals with NRIs: What Really Changes for Resident Indian Buyers After October 1, 2026?

For anyone planning to buy immovable property from a Non-Resident Indian (NRI), the biggest compliance headache was always the complex TDS (Tax Deducted at Source) process. From October 1, 2026, the rules change dramatically — and if you don't adapt, you could get tripped up by a higher TDS rate or face delays in closing your purchase.

This explainer cuts through the detail to show what changes, who benefits, and where the new system could still land you in trouble.

The Old and New: Why TAN Was a Barrier for Many Buyers

Under the current system:

• When a resident Indian (individual or HUF) buys real estate from an NRI, the buyer must deduct TDS (often at 20% plus surcharge and cess) on the capital gains portion of the sale.
• Critically, buyers were required to apply for a TAN (Tax Deduction and Collection Account Number) — a process designed for employers and regular tax deductors. For one-time property buyers, this extra step eats up a week or more and adds uncertainty to an already stressful transaction.
• The buyer then files TDS returns, issues TDS certificates, and often grapples with Form 27Q filings, which are designed for NRI payments.

From October 1, 2026:

• No separate TAN is needed for resident individual or HUF buyers.
• The new system demands only the buyer's PAN to be quoted in the revised Form 141-cum-challan when depositing TDS.
• Buyers complete reporting via Schedule E of the new Form 141.
• There is no requirement to submit a quarterly TDS return for the transaction (unlike current process with Form 27Q).

Who actually benefits? One-time or occasional property buyers gain most. If you've never had a TAN and dreaded the process, these changes can make your transaction smoother and less intimidating.

What PAN, and Which Details, You Must Collect from the Seller — Or Else Face Higher TDS

While the system is simpler, it's not risk-free. The rules now shift more responsibility onto the buyer for collecting and reporting NRI seller details accurately.

Under the revised rules:

1. PAN Priority: You must collect the NRI seller’s PAN. This goes into your Form 141-cum-challan.
2. If No PAN? If the seller can’t provide a PAN, then you, as the buyer, must secure:

- Tax Residency Certificate (TRC) number of the seller (establishes they are a tax resident outside India)

- Tax Identification Number (TIN) from the seller’s country of residence

1. Additional Contact Info: Collect seller’s overseas address, valid email ID, and contact number. These are now explicitly required as part of compliance reporting.

Key Trap: If neither the PAN nor the abroad TRC and TIN are provided by you, the buyer, the law requires TDS at a higher rate. The exact rate isn’t specified yet, but it is likely to be punishing. Failing to get this right means extra money is deducted and the seller may not get credit for TDS in their tax filings.

Step-by-Step: How the New TDS Deduction and Reporting Process Will Work

1. Deduct TDS as per Section 195 (still mandatory on purchase from NRI sellers; the applicable rate remains unchanged unless info is missing).
2. Complete Form 141-cum-challan — now with Schedule E (and including more seller data fields).
3. Quote your PAN in place of TAN on the form.
4. For each buyer: If a property is bought jointly by two or more residents, each must file their own Form 141 for their share and related TDS.
5. Get TDS Certificate in Form 132 — this is your documentary proof that TDS has been deposited.
6. No quarterly TDS returns needed for these specific transactions by individuals/HUFs.

Documents You’ll Need to Keep

• Seller’s PAN, or TRC and TIN (for non-PAN sellers)
• Seller’s overseas address, contact number, and email ID
• Your own PAN
• Form 141-cum-challan (with Schedule E completed)
• TDS Certificate in Form 132

Who Is — and Is Not — Covered by the New Rules?

You qualify for this simplified process if:

• You are a resident Indian individual or HUF buying immovable property from an NRI
• The deal is a single/occasional transaction, not a recurring property purchase business

You may not be covered if:

• You are a company, firm, LLP, trust, or AOP (specific guidance pending)
• You are purchasing multiple properties as part of regular business activity (unclear if simplified regime applies)

What Stays the Same? What Still Isn’t Clear?

• TDS on NRI sale is still required: Section 195 deduction obligation remains
• Rate if missing PAN/TRC/TIN: The penalty for missing seller information is higher TDS as per the law; the exact rate is not yet notified
• Scope for entities: No details yet for companies and other non-individual buyers

How Does This Affect Buyers — Practically?

• No need to apply for a TAN, cutting out up to 10 days of delays
• Fewer filings: No quarterly TDS return (Form 27Q)
• But: More detailed seller information required, and penalties (in the form of higher TDS) for imprecise compliance

Worked Example: What Happens If Seller Has (or Lacks) PAN

Action Steps for Resident Indian Buyers

1. Check if your seller is NRI — and collect/verify their PAN first.
2. If no PAN, immediately request the TRC and TIN from the seller’s resident country.
3. Prepare to collect the seller’s full contact and overseas address information.
4. Download and complete Form 141-cum-challan (with Schedule E).
5. Submit your own PAN as the deductor.
6. Save your TDS certificate (Form 132) — needed for legal record and for the seller’s tax credit claim.

What Should Sellers (NRIs) Do?

• Ensure their PAN is valid and given to buyers, OR
• Obtain a TRC and TIN well in advance and share them with potential buyers
• Respond promptly to buyer’s requests for address, contact and email details

Open Questions Needing Clarification

• The law does not yet specify the exact higher TDS rate if you fail on PAN/TRC/TIN reporting
• It’s not clear if companies or recurring-buyers (flippers, investors) will get the same compliance relief

Resident Indians buying from NRIs after October 1, 2026, will find property deals less bureaucratic, but attention to detail — especially around PAN, TRC, and TIN — is now more critical than ever.