India Drops the TAN Requirement for Residents Buying Property From NRIs

India's Ministry of Finance has removed the requirement for resident individuals and Hindu undivided families to obtain a separate Tax Deduction and Collection Account Number before buying immovable property from a non-resident seller. The change was made by notification G.S.R. 830(E), dated 22 September 2026, and takes effect on 1 October 2026.

The notification is issued as the Income-tax (Fifth Amendment) Rules, 2026, and is also carried as Notification No. 121/2026-IT. It amends the Income-tax Rules, 2026 at Rule 215(1), Rule 218(3) and Rule 219, and revises two forms in Appendix III: Form No. 132 and Form No. 141.

What changed

Until now, a resident buyer purchasing property from a non-resident had to apply for a TAN before deducting tax at source on the purchase consideration, then file a separate quarterly TDS return against that number. The TAN was needed for no other purpose in the transaction, and applying for one added a step that many individual buyers discovered only at the point of registration.

From 1 October, that buyer deducts and reports using their Permanent Account Number instead, through a PAN-based challan-cum-statement. Form No. 132, which lists the transaction types requiring deduction, gains a new entry covering the "Transfer of immovable property by a non-resident to a resident individual or Hindu undivided family". Form No. 141, the challan-cum-statement itself, gains a new Schedule E dedicated to tax deducted on consideration for the transfer of immovable property under section 393(2). The category sits at serial number 17 of the Rule 215(1) table.

Schedule E is more detailed than the reporting it replaces. It captures the property details, the identity of every buyer and every seller on the instrument, the agreement and registration dates, the stamp duty value, the total consideration and the instalment breakdown where the price is paid in tranches. Where the seller is a non-resident, the buyer is also expected to record the seller's Tax Residency Certificate number, their foreign Tax Identification Number and confirmed overseas contact details.

What it means for a foreign buyer

If you are an NRI holding Indian property, the person this helps is your buyer, and that is the point. Sales have stalled at the registration counter because a resident buyer reached completion without a TAN and had to wait for one to be issued. From 1 October that dependency disappears, so the closing timeline on the buyer's side shortens and a deal is less likely to be renegotiated while a certificate is pending.

The cost is documentation, and it falls on you. A buyer cannot complete Schedule E without your Tax Residency Certificate number and your foreign Tax Identification Number. If you do not hold a current TRC from your country of residence, obtain one before you list, because it is now needed to file the return rather than only to support a claim for a lower deduction rate.

The amount withheld from your sale proceeds does not change.

The mechanism

The legal anchor is section 393(2) of the Income-tax Act, 2025, the provision that carries the deduction obligation on payments for the transfer of immovable property. The September notification does not alter section 393(2) itself. It changes the machinery underneath it: which rule the deduction is reported under, which form carries it, and what identifier the deductor uses.

That distinction matters, because the deduction obligation is unchanged. A resident buying from a non-resident still has to withhold tax at source on the consideration, and still has to remit it. For long-term capital gains on transfers made on or after 23 July 2024, the base rate is 12.5 percent, with surcharge and cess applied according to the seller's circumstances, and with any relief under an applicable double taxation treaty claimed separately. Short-term gains are withheld at the rate applicable to the non-resident seller.

The transition is hard-edged. A transaction completed before 1 October must still follow the existing TAN-based procedure, and the PAN-based mechanism cannot be used early. A seller with a deal closing in the last days of September and a buyer without a TAN faces a choice between completing under the old route and waiting for the new one.

Context

India does not permit most foreign nationals to buy residential or commercial property outright. Acquisition is generally restricted to non-resident Indians and persons of Indian origin under the Foreign Exchange Management Act framework, with agricultural land, plantation property and farmhouses excluded for all of them. Foreign nationals who are not of Indian origin can generally acquire property only through inheritance or after establishing residence in India, and corporate acquisition routes are separately regulated.

That framework leaves the NRI resale market as the main channel through which offshore capital exits Indian residential property, which is why the withholding mechanics on an NRI sale carry disproportionate weight. The buyer, not the seller, bears the compliance risk on a short deduction, so buyers have historically negotiated hard on documentation. The September notification reduces the procedural burden on that side without reducing the amount withheld.

Investors weighing India against other jurisdictions open to non-resident buyers can compare the withholding approach with Singapore's stamp duty and property tax regime for foreign owners, the UAE's property-linked golden visa rules, and the ownership rules applying to foreigners in Sri Lanka.

Sources

- Income-tax (Fifth Amendment) Rules, 2026, notification G.S.R. 830(E)

- TDS on Immovable Property Transactions by Resident Individuals and HUFs

- Property purchase from NRIs gets easier as government amends Form 141

- New TDS Rules for NRI Property Deals: What Buyers Must Know from Oct 1

- NRI property sale rules to change from October 1, 2026

Before you commit

Considering a developer you read about here?

You cannot walk the land from another country. But you can verify the developer. Bektu contacts them on your behalf and sends you a scored report. They never see who asked.

Search and verify any developer

Stay a step ahead of the wire transfer

Get the occasional note from Bektu on verifying developers before you commit. No noise, just what matters.

We will never share your email. You can opt out at any time.