Buying a flat from an NRI? Since 1 October 2026 your PAN does the job of a TAN
A resident buyer no longer needs a separate tax number to deduct TDS when the seller lives abroad. The deduction itself is unchanged, at 12.5% on long-term gains plus surcharge and cess.
From 1 October 2026, a resident individual or HUF buying property from a non-resident can deposit TDS using their PAN. They no longer need a TAN, the tax deduction account number. The new route is Schedule E of Form 141. The buyer still has to deduct tax at the rates for non-residents, plus surcharge and cess.
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Since 1 October 2026, a resident individual or HUF buying property from a non-resident can pay the TDS with their own PAN. The buyer no longer has to apply for a TAN first.
A TAN is the tax deduction account number. Businesses and employers use it to deposit tax they hold back from payments. Until September, a family buying one flat from an NRI had to get one too, for a single transaction.
What changed
The Budget 2026 memorandum proposed the change. It said the TAN requirement "creates unnecessary compliance burden for the buyer, as he would need TAN for a single transaction."
Parliament passed it as section 87 of the Finance Act, 2026, published on 30 March 2026. It amends section 397(1)(c) of the Income-tax Act, 2025 from 1 October 2026, adding resident individuals and HUFs to the list of people who need no TAN. The relief covers "any consideration for the transfer of any immovable property" paid to a non-resident under section 393(2).
The CBDT then put the procedure in place. Its notification of 22 September 2026, the Income-tax (Fifth Amendment) Rules, 2026, took effect on 1 October 2026.
Companies, firms and other buyers still need a TAN. The relief covers only resident individuals and HUFs.
How the buyer pays now
The buyer files Form 141, the PAN-based challan-cum-statement. The rules add a new Schedule E to it for property bought from a non-resident.
Schedule E asks for:
- the property address and whether it is land, a building or both
- the PAN and share of each buyer
- the seller's PAN, contact details and overseas address
- the agreement date, the stamp duty value and the total price
- whether the payment is a lump sum or one of several instalments
- whether the seller's gain is long-term or short-term
- the amount on which tax is deducted, the rate and the tax deducted
The rules also set these details:
- Joint buyers. Each buyer files a separate form for their own share.
- Surcharge and cess. The tax deducted must include both.
- No PAN for the seller. The buyer then gives the seller's tax residency certificate number and foreign tax ID. The rules say this is to make sure tax "is not deducted at higher rate".
- Certificates. The form has fields for a lower or nil deduction certificate under section 395.
The deduction did not change
The rates a buyer must deduct from an NRI seller did not change. Only the way of paying them did.
For a resident seller, TDS applies under a different entry, section 393(1). It applies when the price or the stamp duty value is ₹50 lakh or more, as the memorandum notes.
For a non-resident seller, Part II of the First Schedule to the Finance Act, 2026 sets the rates for 2026-27:
| Seller's gain | Rate | Surcharge | With 4% cess |
|---|---|---|---|
| Long-term, amount up to ₹50 lakh | 12.5% | None | 13.0% |
| Long-term, ₹50 lakh to ₹1 crore | 12.5% | 10% | 14.3% |
| Long-term, above ₹1 crore | 12.5% | 15% | 14.95% |
| Short-term, seller on the new tax regime (the default) | 30% | None to 25%, by amount | 31.2% to 39.0% |
| Short-term, seller who opted out of the new regime | 30% | None to 37%, by amount | 31.2% to 42.74% |
The surcharge on long-term capital gains is capped at 15%. Short-term gains on property do not get that cap, and their top surcharge depends on the seller's tax regime. That is why Schedule E asks whether the seller has opted out of the new regime. The same rates apply whether or not the seller is an Indian citizen.
Illustration. Say you agree to buy a flat from your cousin in Dubai for ₹2.4 crore, and the cousin's gain is long-term. Tax at 14.95% on the full ₹2.4 crore would be ₹35.88 lakh.
That figure assumes the whole price is the amount liable to deduction. If the seller gets a lower deduction certificate under section 395, the buyer deducts at the certificate's rate instead. The memorandum says the seller can now apply for one electronically.
What is still open
How much of the price counts as the amount liable to deduction, without a certificate, is a question for a CA.
Payments made before 1 October 2026 followed the old procedure, with a TAN.
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Questions
- Do I need a TAN to buy property from an NRI?
- Not since 1 October 2026, if you are a resident individual or HUF. You can deposit the TDS with your PAN through Form 141, Schedule E. Companies and firms still need a TAN.
- Which form does a buyer use to pay TDS to an NRI seller?
- Form 141, the PAN-based challan-cum-statement. The CBDT's notification of 22 September 2026 added Schedule E to it for property bought from a non-resident.
- What is the TDS rate when an NRI sells property held long-term?
- The Finance Act, 2026 sets 12.5% for 2026-27, plus surcharge of 10% above ₹50 lakh or 15% above ₹1 crore, plus 4% cess. That is 14.95% at the top band.
- Is there a ₹50 lakh threshold when the seller is an NRI?
- The ₹50 lakh threshold belongs to the entry for resident sellers, section 393(1). Sales by non-residents fall under a separate entry, section 393(2).
- Can the TDS on an NRI sale be lower?
- Yes, if the seller gets a lower or nil deduction certificate under section 395. Form 141 has a field for the certificate number.
- What if two of us are buying the flat?
- Each buyer deducts tax on their own share and files a separate Form 141.
Sources
- Memorandum explaining the provisions in the Finance Bill, 2026: relaxation from TAN for resident individuals and HUFs buying from a non-resident (clause 75), lower deduction certificates (section 395), resident-seller threshold (section 393(1)), Budget 2026-27
- Finance Act, 2026 (No. 4 of 2026), section 87 (section 397) and First Schedule Part II, rates for deduction of tax at source and surcharge, Gazette of India (30 Mar 2026)
- CBDT notification 121/2026, Income-tax (Fifth Amendment) Rules, 2026, G.S.R. 830(E), Form 141 Schedule E (22 Sep 2026), copy of the Gazette text
Compound is analysis, not investment advice. Reva Money is not a SEBI-registered investment adviser.
