Buying a property from a non-resident Indian (NRI) has long involved an additional layer of tax compliance for Indian buyers, particularly when it comes to deducting and depositing tax at source (TDS). That process is set to become simpler from October 1, 2026, when eligible resident individuals and Hindu Undivided Families (HUFs) will no longer need to obtain a separate Tax Deduction and Collection Account Number (TAN) for such transactions.
Instead, buyers will be able to use their Permanent Account Number (PAN) for depositing the applicable TDS.
The change, introduced through the Finance Act, 2026, is aimed at bringing the compliance process for purchases from NRI sellers closer to the one already followed in transactions involving resident sellers. The Income Tax Department has said the move is intended to reduce the compliance burden on resident individuals and HUFs.
For the real estate market, the change could have significance beyond simply removing one registration requirement. Property transactions involving NRIs can involve multiple tax and documentation steps, and any reduction in procedural friction can make the transaction easier for both sides.
What changes from October 1?
Under the existing system, a resident individual or HUF buying immovable property from an NRI is required to obtain a TAN for deducting and depositing the applicable TDS.
That requirement continues until September 30, 2026.
From October 1, eligible resident individual and HUF buyers will be able to deduct and deposit the tax using their PAN, without obtaining a separate TAN. The Income Tax Department has specifically described the change as a measure to make the process similar irrespective of whether the property seller is a resident or non-resident.
This distinction is important for buyers who are currently negotiating or closing transactions with NRI sellers. A transaction completed before October 1 will continue to be subject to the existing TAN requirement.
TDS on NRI property sales remains important
The removal of the TAN requirement does not mean that TDS itself is being removed.
When an NRI sells immovable property in India, the buyer remains responsible for deducting tax at source. Unlike transactions involving resident sellers under Section 194-IA, there is no ₹50 lakh threshold for TDS in the case of an NRI seller. The applicable rate depends on the nature of the capital gain and the seller’s tax position.
For long-term capital gains, the applicable TDS rate is 12.5%, along with applicable surcharge and cess, while short-term capital gains are subject to the applicable slab rate of the NRI, along with surcharge and cess.
This makes it important for buyers and sellers to establish the tax treatment of the transaction before the sale is completed rather than treating the TAN relaxation as a blanket tax exemption.
A change that could reduce friction in NRI transactions
For the real estate industry, the practical benefit may lie in reducing the amount of paperwork and procedural coordination required from an individual buyer.
Ashok Singh Jaunapuria, Managing Director and CEO, SS Group, said, “The simplification of the TAN requirement is a positive step for the residential real estate market, particularly for transactions involving NRIs. When tax compliance becomes more straightforward, it reduces procedural friction for buyers and sellers and can help transactions move forward with greater certainty. For a market like Gurugram that increasingly relies on NRI participation, making the documentation process simpler can also strengthen confidence in Indian real estate.”
Industry players see the change as particularly relevant at a time when NRIs remain an important pool of property buyers and sellers in India.
Raghunath Reddy Bhattagiri, Co-founder & MD, Triguna Projects, said the move could make property transactions easier for the Indian diaspora.
“These reforms in the TAN norms relating to property transactions of NRIs are certainly a welcome development for the real estate industry. The ease in the TDS procedure would certainly help both NRIs and Indians conducting their business in a much simpler manner. This is particularly good news for NRIs who plan to conduct transactions of buying or selling properties in India, as an easier compliance system may simplify the process and help avoid any delays in transaction. This will go a long way in building investor confidence and making the Indian real estate market easier for the global Indian diaspora to invest in. The reforms will make it easier for more NRIs to venture into the emerging Indian real estate market through easier compliance, transparency, and documentation. All in all, such reforms can help make property dealings easy and ensure the growth of the Indian real estate sector.”
Buyers still need to get the paperwork right
While the new provision removes one compliance hurdle, buyers should not assume that the transaction becomes paperwork-free.
Proof of TDS payment can be important at the time of property registration. Tax experts cited by Economic Times and Business Today have noted that sub-registrar offices in several states may seek evidence that the required TDS has been deposited, including the relevant TDS challan or certificate.
The Income Tax Department’s framework also requires the buyer to report the TDS transaction through the prescribed challan-cum-statement process.
For buyers completing a transaction before October 1, the immediate priority therefore remains obtaining the required TAN and completing the existing compliance process.
For transactions falling under the new regime from October 1, the process becomes more straightforward, with the buyer using PAN instead of obtaining a separate TAN.
What this means for the market
The change may appear technical, but for the property market its significance is practical. An individual buying a property from an NRI may otherwise have to obtain a TAN specifically to meet the TDS requirement associated with that transaction.
Removing that additional step could make the process less intimidating for first-time buyers and reduce the administrative burden involved in NRI property transactions.
For NRIs, the benefit is indirect but potentially meaningful: a simpler process for the buyer can mean fewer compliance-related delays in completing a sale.
The reform therefore does not change the tax obligation attached to an NRI property sale. Instead, it changes how the buyer complies with that obligation.
And that distinction will matter from October 1, 2026, when India’s property transaction framework takes one small but significant step towards making NRI transactions easier to execute.