Buying Property From an NRI? No TAN Needed From 1 October
From 1 October 2026, buyers can pay TDS on property bought from an NRI using their PAN, without a TAN. What changes, TDS rates, and the steps to follow.
By Balaji Anbazhagan
· 4 min read
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Buying a flat or plot from a non-resident Indian (NRI) has always come with one extra chore: the buyer had to apply for a TAN (Tax Deduction and Collection Account Number), just to deduct tax from a single payment. The Union Budget 2026 removed that step. From 1 October 2026, a resident buyer can deduct and pay the TDS using their own PAN, the same way people already do when buying from a resident seller.
The short answer
- From 1 October 2026: no TAN needed. The buyer pays the TDS with a PAN-based challan on the income tax portal.
- Until 30 September 2026: the old process applies, so a buyer still needs a TAN.
- TDS is still compulsory, and the rates have not changed. Only the paperwork is simpler.
- The TDS is much higher than for a resident seller: about 13% to 15% on a long-term sale, compared with 1% when buying from a resident.
- No ₹50 lakh threshold: TDS applies to every property bought from an NRI, whatever the price.
What changed
| Until 30 September 2026 | From 1 October 2026 | |
|---|---|---|
| Buyer needs a TAN | Yes | No |
| How TDS is paid | Challan using TAN | PAN-based challan, like Form 26QB |
| Quarterly TDS return | Required | Not needed for this payment |
| TDS rates | Unchanged | Unchanged |
| TDS certificate for the NRI | Issued by the buyer | Issued by the buyer through the portal |
Getting a TAN took a week or two and meant a return to file afterwards. Many individual buyers did not know about it until the day of registration, which held up deals. The new process removes that delay.
How much TDS the buyer deducts
The seller’s holding period decides the rate. Property held for more than 24 months is long-term; anything shorter is short-term.
| Type of gain | Base rate | With surcharge and 4% cess |
|---|---|---|
| Long-term, sale price up to ₹50 lakh | 12.5% | 13.0% |
| Long-term, ₹50 lakh to ₹1 crore | 12.5% | 14.3% (10% surcharge) |
| Long-term, above ₹1 crore | 12.5% | 14.95% (15% surcharge) |
| Short-term | 30% for most NRIs | Up to about 39% |
| Seller has no PAN | At least 20% | – |
In practice, buyers deduct TDS on the full sale price, not just the seller’s profit, unless the NRI shows a lower TDS certificate from the Income Tax Department.
An example
Priya buys a flat from an NRI for ₹1.2 crore. The seller has owned it for eight years, so the gain is long-term.
- TDS at 14.95% on ₹1.2 crore = ₹17.94 lakh
- Priya pays the seller ₹1,02,06,000 and deposits ₹17.94 lakh with the government.
- The seller claims the TDS as credit when filing an Indian tax return. If the actual tax on the gain is lower, the difference comes back as a refund.
Steps for the buyer from 1 October
- Get the seller’s PAN and check they are a non-resident. Ask for proof of when they bought the property.
- Ask whether the seller has a lower TDS certificate. If they do, deduct at the rate it states.
- Work out the TDS on the sale price, adding surcharge and cess.
- Pay it online on the income tax e-filing portal with the PAN-based challan, using your PAN and the seller’s PAN.
- Download the TDS certificate and give it to the seller.
Pay on time. If TDS is deducted late or deposited late, the buyer owes interest and can be treated as being “in default”. The seller does not bear that; the buyer does.
Tips for NRI sellers
- Apply for a lower TDS certificate early. If your real gain is small, or you plan to reinvest it in another home or in capital gains bonds, TDS on the full price can lock up far more money than you owe. The certificate can take a few weeks.
- File an Indian tax return for the year of sale to claim any refund.
- Keep records of the purchase price and improvement costs. Estimate your gain with the capital gains calculator.
Frequently asked questions
I am buying from an NRI this month. Do I still need a TAN? Yes, if the payment and TDS happen on or before 30 September 2026. From 1 October, you can use your PAN.
Has the TDS rate on NRI property sales been reduced? No. The change is only about the process. The rates stay the same.
Is there a ₹50 lakh limit, as with resident sellers? No. TDS applies to every purchase from an NRI, whatever the amount.
Who is responsible if TDS is not deducted? The buyer. The buyer may have to pay the tax, interest and a penalty.
Sources
- Union Budget 2026-27 and Finance Act 2026: indiabudget.gov.in
- Income Tax Department, e-filing portal: incometax.gov.in
- Square Yards, “NRI property sale rules to change from October 1, 2026”: squareyards.com
- Patron Accounting, “NRI property TDS 2026: PAN replaces TAN”: patronaccounting.com
This article is for general information and education, not financial, tax or investment advice. Rules and rates change; check official sources or consult a qualified professional before acting. See our disclaimer.