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No TAN for NRI property purchase applies only from 1 October 2026, and only to resident individual and HUF buyers. Get the rates, forms, and dates you need.
If you're buying a flat or plot from an NRI seller, you've probably heard that TAN is going away. That's true, but only partly. The relief starts on 1 October 2026, and it applies only if you're a resident individual or HUF. If you're buying today, or if you're a company or a firm buying at any point, the old TAN-and-Form-144 process still applies. Here's what actually changes, what doesn't, and what to do if your registration date happens to fall right on the cutover.
Right now, if you're a resident buyer purchasing property from a Non-Resident Indian (NRI), you have to deduct TDS under Section 393(2) of the Income-tax Act, 2025 — the provision that took over from the old Section 195 when the new Act came into force on 1 April 2026. To deduct that TDS, you need a TAN (Tax Deduction and Collection Account Number), which is separate from your PAN and involves its own application.
That changes from 1 October 2026. Section 397(1)(c) of the 2025 Act will exempt resident individual and HUF buyers from getting a TAN for this specific transaction. You'll deduct and deposit TDS using your PAN instead, much the way resident-to-resident property deals already work through Form 141. Companies, LLPs, and partnership firms don't get this relief — TAN stays mandatory for them no matter when they buy.
It's worth saying plainly: this is a compliance simplification, not a tax cut. You still deduct the same TDS at the same rate. You just won't need to register for a TAN to do it, and the quarterly paperwork should get lighter too.
Applies to | Does not apply to |
|---|---|
Resident individual buyers purchasing from an NRI, from 1 October 2026 | Resident individuals buying before 1 October 2026 (TAN is still required) |
Resident HUF buyers, from 1 October 2026 | Companies, LLPs, and partnership firms buying from an NRI, at any time |
Deals where the seller is an NRI, OCI, or a foreign citizen | Deals with a resident seller — that's Section 393(1), a separate, older PAN-only rule |
A small but important point: what matters is who is named as the buyer on the sale deed, not their job. A company director buying a flat in his own name still qualifies for the relief. And if your payments straddle 1 October, each instalment is judged by its own payment date — not by when the overall deal started.
One thing hasn't been clarified yet: whether joint buyers who are both individuals or HUFs can each use their own PAN independently after 1 October, or whether one of them still needs to be treated as the "primary" deductor. The CBDT hasn't issued anything on this as of writing, so check the Income Tax Department's website closer to your registration date, or ask your CA.
The paperwork is changing. The tax rate is not.
Nature of gain | Holding period | TDS rate |
|---|---|---|
Long-term capital gain (LTCG) | More than 24 months | 12.5%, without indexation, plus surcharge and 4% cess |
Short-term capital gain (STCG) | 24 months or less | Slab rate, applied at 30% in practice, since the buyer has no way to verify the seller's actual income, plus surcharge and cess |
Seller hasn't furnished PAN | Either | 20% flat, under Section 397(2) |
There's no ₹50 lakh threshold here — that exemption only applies to resident-to-resident sales under Section 393(1). When you're buying from an NRI, TDS kicks in from the first rupee, whether the property costs ₹9 lakh or ₹9 crore.
Before 1 October 2026: apply for a TAN, deduct TDS under Section 393(2) [Table Sl. No. 17], file the quarterly Form 144 (which replaced the old Form 27Q), and hand your seller a Form 131 (the new name for Form 16A) as proof of deduction.
From 1 October 2026, for individual and HUF buyers: skip the TAN. Deposit TDS using your PAN through a challan-cum-statement, broadly similar in spirit to how Form 141 already works for resident-seller deals. The exact form number for this NRI-seller PAN challan hadn't been notified as of July 2026 — keep an eye on the Income Tax Department's forms page as the date approaches.
OCI card holders and Persons of Indian Origin (PIOs) are treated the same as NRIs for this purpose. The rates, the lack of a threshold, and the October 2026 TAN relief all apply the same way, regardless of whether your seller lives in Dubai, London, or Toronto.
Ramesh, a software engineer in Pune, is buying a 2BHK from his NRI aunt in Toronto for ₹72,00,000. Registration is scheduled for August 2026. She's owned the flat since 2012, so this is a long-term gain.
TDS = ₹72,00,000 × 12.5% = ₹9,00,000
Add 4% cess: ₹9,00,000 × 1.04 = ₹9,36,000
Net payment to the seller = ₹72,00,000 − ₹9,36,000 = ₹62,64,000
Because the deal closes in August, Ramesh needs a TAN first, and then has to file Form 144 every quarter until it's done.
Priya, a resident buyer in Bengaluru, is buying a plot from an NRI seller in Dubai for ₹40,00,000. The seller bought it just 14 months earlier, so this counts as short-term.
TDS at the conservative 30% slab = ₹40,00,000 × 30% = ₹12,00,000
Add 4% cess: ₹12,00,000 × 1.04 = ₹12,48,000
Net payment to the seller = ₹40,00,000 − ₹12,48,000 = ₹27,52,000
Registration happens in November 2026, so Priya deposits this using her own PAN — no separate TAN application required.
Had Priya's NRI seller applied in advance for a Form 128 lower-deduction certificate showing the actual gain was much smaller than 30% of the sale price, this TDS bite could have been far smaller. That's usually the single biggest lever an NRI seller has to avoid locking up cash for months.
If you want to run your own numbers, including surcharge slabs, before you register anything, you can use a TDS calculator for NRI property sales. It's also worth reading through the broader TDS rate chart for FY 2026-27 if you're dealing with other non-salary payments to non-residents in the same year.
Right now, and for any deal closing before 1 October 2026:
Apply for a TAN on the income tax e-filing portal, under Services → TAN.
Deduct TDS at the applicable rate when you pay or credit the seller, whichever happens first.
Deposit the amount through Challan ITNS 281, quoting your TAN.
File Form 144 every quarter — due 31 July, 31 October, 31 January, and 31 May.
Issue Form 131 (the TDS certificate) to your seller within 15 days of the return's due date.
From 1 October 2026, for eligible individual and HUF buyers:
Skip the TAN application.
Deduct TDS at the same rate as before — nothing changes here.
Deposit it using your PAN through the notified challan-cum-statement.
Whether a separate quarterly filing is still needed after that, or whether the challan-cum-statement covers it fully, hasn't been settled in any CBDT circular yet. Confirm with a CA rather than assuming either way.
You deducted TDS at 20% because the seller hadn't given you their PAN, and they've since sent it. File a correction statement through TRACES after the deposit. You can't lower the challan retroactively, but the seller can claim credit for the extra amount deducted, and your future instalments can go through at the correct rate.
You skipped TAN assuming the PAN-only rule already applied, but your actual payment date was before 1 October 2026. What matters is the date you paid or credited the seller, not today's date. Apply for a TAN right away and correct the filing. Interest for the delay applies under Section 398.
You filed Form 144 quoting "Section 195" instead of "Section 393(2), Serial No. 17." The CPC may mark the return as defective. File a correction statement with the right section reference. Usually only the deductee-level entry needs fixing — you don't need a fresh deposit.
Document | Digital copy accepted? | Where to get it |
|---|---|---|
Buyer's PAN | Yes | e-filing portal, if not already registered |
NRI seller's valid PAN (mandatory, or 20% TDS applies) | Yes | Provided by the seller; apply through NSDL/Protean if missing |
Sale deed or agreement of sale | Yes | Drafted by your property lawyer |
TAN application acknowledgment (deals before 1 Oct 2026) | Yes | e-filing portal, Form 49B |
Lower TDS certificate, Form 128 (replaces old Form 13) | Yes | Seller applies via TRACES under Section 395(1) |
Stamp duty valuation certificate | Yes | Sub-registrar's office |
FEMA repatriation paperwork (Form 145, and Form 146 from the CA where needed) | Yes | Arranged by the seller's CA to move proceeds out of the NRO account |
Failed to deduct TDS: interest at 1% per month, from the due date to the date you actually deduct, under Section 398.
Deducted but not deposited: interest at 1.5% per month, under Section 398(3).
Late Form 144 filing: ₹200 per day, capped at the quarter's TDS amount, under Section 427.
Return left unfiled a year past due: a penalty of ₹10,000 to ₹1,00,000, under Section 461.
No PAN from the NRI seller: an automatic jump to 20% TDS instead of 12.5%, under Section 397(2). It's not a fine in the technical sense, but it hits the seller's payout just as hard.
Yes. The relief only begins on 1 October 2026. Any payment or credit before that date still needs a TAN and quarterly Form 144 filing, exactly as before.
No, and this is the most common mix-up on this topic. It becomes optional only for one group — resident individual and HUF buyers, from 1 October 2026. Companies, LLPs, and firms still need one, regardless of the date.
Yes, always. The Section 397(1)(c) relief only covers resident individual and HUF buyers. A company or firm follows the existing TAN-and-quarterly-filing process even after October 2026.
Form 141 (which replaced Form 26QB) is for buying from a resident seller — a one-time, PAN-based challan, with the ₹50 lakh threshold applying. Form 144 (which replaced Form 27Q) is for buying from an NRI — a quarterly return that currently needs a TAN, with no threshold at all. Mixing these two up is one of the costliest mistakes buyers make.
Yes. The seller can file Form 128 (which replaced the old Form 13) under Section 395(1) of the 2025 Act, asking the Assessing Officer for a lower or nil deduction certificate. If it's approved, you deduct at that certified rate instead of the default one.
No. That direction never needed a TAN in the first place. When an NRI buys from a resident, TDS runs under Section 393(1) — the same PAN-based mechanism used in any resident-to-resident sale. This change only touches the reverse direction: a resident buying from an NRI.
That filing would be defective, since the PAN-only route legally starts only on 1 October 2026. Apply for a TAN retroactively and refile Form 144 correctly. Interest under Section 398 may apply for the delay.
Yes. Both are treated as non-residents for property TDS purposes under Section 393(2), so the same rates, the same lack of threshold, and the October 2026 TAN relief apply to sales by OCIs and PIOs just as they do to NRIs.
No. Unlike the ₹50 lakh floor on resident-to-resident deals, TDS on an NRI seller's property applies from the first rupee. A ₹9 lakh plot attracts it just as much as a ₹9 crore bungalow.
No, regardless of when they bought it. Indexation was removed for most property sales from 23 July 2024 onward, and that continues to govern FY 2026-27 sales too. The seller pays 12.5% on the full gain either way.
No. Excess TDS — which is common, since the buyer usually deducts on the full sale price rather than just the gain — is only refunded once the NRI files an Indian income tax return for that year and claims credit through Form 168 (formerly Form 26AS). Moving the net proceeds abroad is a separate step that needs Form 145, plus Form 146 from a CA where the remittance is taxable.
The no TAN for NRI property purchase change is real, but it's narrow. Before you assume either process applies to your deal, check your payment date against 1 October 2026. Get your seller's PAN locked in early — a missing PAN alone adds 7.5 extra percentage points of TDS. If you want to work out the exact numbers for your deal, including surcharge slabs, a TDS calculator for NRI sellers can help, and it's worth cross-checking the current forms on the Income Tax Department's official site before you file anything.
For educational purposes only. Please verify figures at official sources before acting, and consult a qualified CA or legal professional before making compliance decisions.
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