PAN-Based Compliance Replaces TAN from 1 Oct 2026

TDS on Purchase of Property from an NRI: PAN-Based Compliance Replaces TAN from 1 October 2026

• The Government has significantly simplified the TDS compliance process for resident buyers purchasing immovable property from a Non-Resident Indian. Under the Income-tax (Fifth Amendment) Rules, 2026, effective from 1 October 2026, a resident individual or Hindu Undivided Family is no longer required to obtain a Tax Deduction and Collection Account Number  for deducting tax on the purchase of property from a non-resident seller.
• To simplify the process, the Finance Act, 2026 and the Income-tax (Fifth Amendment) Rules, 2026 have introduced a PAN-based compliance mechanism for eligible buyers. This created unnecessary compliance burden for individuals carrying out a single property transaction.
• Instead, the compliance will now be completed through a PAN-based Form No. 141 (Schedule E), making the process similar to the mechanism already applicable for purchases from resident sellers.

What is TAN, and why was it required earlier?

A Tax Deduction Account Number is a unique registration number required for persons responsible for deducting tax at source. Until now, a resident buying property from a Non-Resident Indian  was required to obtain a TAN before deducting and depositing TDS on the purchase consideration.

This often created a significant compliance burden because most property buyers undertake such transactions only once and had to obtain a separate TAN solely for complying with TDS provisions

What Changes from 1 October 2026?

• Effective 1 October 2026, a significant compliance relief has been provided to resident individuals and Hindu Undivided Families purchasing immovable property from a non-resident seller.

Earlier Compliance Process

• Buyer → Obtain TAN → Deduct TDS → Deposit Tax → File TAN-based Returns → Issue TDS Certificate
• Earlier
  • TAN application required.
  • Quarterly TDS return filing.
  • Additional registration and compliance burden.
  • Complicated process for one-time property buyers.

New Compliance Process (From 1 October 2026)

• Buyer → Use PAN → Deduct TDS → File Form No. 141 (Schedule E) → Deposit Tax → Issue TDS Certificate
• Under the revised framework, an eligible buyer is no longer required to obtain a Tax Deduction and Collection Account Number solely for deducting Tax Deducted at Source (TDS) on such property transactions. Instead, the buyer can complete the entire TDS compliance process using their Permanent Account Number via Form No. 141 (Schedule E).
• This amendment removes a major procedural hurdle for individuals involved in what is typically a one-time property transaction.
• Now
  • No TAN required.
  • PAN-based compliance.
  • Single transaction reporting.
  • Simplified filing through Schedule E of Form No. 141.
  • Reduced compliance burden for resident buyers purchasing property from NRIs.

No INR 50 Lakh Threshold for NRI Property Transactions

A common misconception is that TDS applies only when the property value exceeds INR 50 lakh. This threshold applies to certain resident seller transactions. For an NRI seller:

• TDS is applicable from the first rupee of consideration.
• There is no INR 50 lakh exemption threshold.
• Tax generally has to be deducted on the entire sale consideration, unless a lower deduction certificate is obtained.

Who Can Benefit from This Change?

The amendment only simplifies the compliance procedure. It does not remove the obligation to deduct TDS. The simplified procedure applies where:

• The buyer is a Resident Individual or Resident HUF.
• Seller is a Non-Resident.
• The transaction relates to Immovable Property situated in India.
• TDS is deductible u/s 393(2) of the Income-tax Act, 2025.

TDS Obligation Has Not Changed : TDS Obligation Continues

The most important point to understand is that the amendment does not eliminate the requirement to deduct TDS on the purchase of property from a non-resident seller.

The change is purely procedural and relates only to the method of compliance. The buyer must still:

• Determine the applicable TDS liability. Applicable rates continue as per the law in force.

• The Deduct tax u/s 393(2) of the Income-tax Act, 2025.
• Deduction continues on payments made to a non-resident seller.
• Deposit the tax with the Government.
• Report the transaction in the prescribed form.
• Therefore, no TAN is required. TDS requirement not removed. The amendment simply substitutes a PAN-based reporting mechanism in place of the earlier TAN-based system
• The buyer can still be treated as an “assessee in default” for non-deduction

The revised framework simplifies the process by:

• Eliminating TAN registration.
• Allowing PAN-based filing.
• Reducing paperwork.
• Aligning the process more closely with resident-to-resident property transactions.

Practical Benefits for Property Buyers

Why Is This Change Important?

Before this amendment, an individual purchasing property from an NRI had to Apply for TAN, Maintain TAN records, File periodic TDS returns., Comply with additional reporting requirements.

Earlier

• Mandatory TAN registration.
• Separate TAN-based TDS compliance.
• Quarterly reporting obligations.
• Additional administrative burden.

From 1 October 2026

• No TAN application required.
• PAN-based compliance framework.
• Single transaction reporting through Form No. 141.
• Simplified documentation and filing process.
• Easier compliance for one-time property buyers.

Buyer Compliance Process: Before and After 1 October 2026

Particulars	Up to 30 September 2026	From 1 October 2026*
Buyer Identification	TAN mandatory	PAN sufficient
Registration Requirement	TAN application required	No TAN required
TDS Reporting Method	Quarterly TDS return filing	Form 141 (Schedule E)
TDS Certificate Issued to Seller	Earlier TDS Certificate Process	Form 132
Joint Buyers	Each co-buyer required a TAN	Each co-buyer files separate Form 141
TDS Rate	Unchanged	Unchanged
TDS Threshold	Unchanged	Unchanged

*Applicable to eligible Resident Individual and HUF buyers purchasing immovable property from a non-resident seller.

How This Change Impacts NRI Property Transactions

The amendment simplifies only the compliance process. It does not reduce or remove the TDS obligation. Important Clarification

• TAN requirement removed.
• PAN-based reporting introduced.
• Form 141 (Schedule E) introduced.
• TDS obligation not removed.
• The TDS rate not reduced.
• No exemption threshold introduced.

TDS on Property Purchased from an NRI Continues

When purchasing property from a non-resident seller:

• TDS is generally required on the gross sale consideration.
• There is no INR 50 lakh threshold available for NRI sellers.
• TDS is applicable from the first rupee of consideration.
• Applicable surcharge and cess continue to apply wherever relevant.

Since buyers generally do not know the seller’s exact taxable capital gain, tax is ordinarily deducted on the entire consideration unless a lower deduction certificate is obtained.

Illustration: NRI Property Sale

Example : Suppose Rahul, an NRI residing in Texas, sells a residential flat in Pune.

Particulars	Amount
Sale Consideration	INR 2,00,00,000

Purchase Cost | INR 1,50,00,000

Capital Gain | INR 50,00,000

Illustrative TDS Position

Particulars	Amount
TDS deducted by buyer (approx. 14.95% of sale value)*	INR 29,90,000
Estimated tax liability on gain*	INR 7,47,000
Excess TDS refundable through Income-tax Return*	INR 22,43,000

*Illustrative figures only. Actual tax liability depends on capital gain computation, surcharge, cess, exemptions, and individual circumstances. This example demonstrates why obtaining a lower deduction certificate can be extremely beneficial for NRI sellers.

Information Required from the NRI Seller Under Schedule E

The newly introduced Schedule E requires detailed information regarding both the seller and the property transaction. The buyer may request:

Basic Seller Details

• PAN (if available)
• Full name
• Residential status
• Contact number
• Email address

Overseas Details

• Foreign residential address
• Country of residence

Additional Details Where PAN Is Not Available

• Tax Residency Certificate
• Foreign Tax Identification Number
• Other overseas tax residency information

These details help ensure proper reporting and avoid higher withholding implications.

Lower Deduction Certificate Can Save Significant Cash Flow

• For most NRI property transactions, the most important planning tool is obtaining a Lower Deduction Certificate before completion of the sale.
• Why It Matters Without a certificate TDS is typically deducted on the gross sale consideration. With a certificate TDS can be deducted at a lower rate reflecting the actual taxable gain, Large refund claims can be avoided and Cash flow is significantly improved.
• The certificate should ideally be obtained before registration or payment and cannot generally be applied retrospectively after the transaction is completed.

• Since TDS is generally deducted on the gross sale consideration, the tax deducted may sometimes exceed the actual capital gains tax liability of the NRI seller. To avoid excessive deduction via Lower TDS Deduction Option:
• Seller’s Option : The NRI seller may apply for a certificate u/s 395(1) seeking deduction at a lower rate.
• Buyer’s Option : The buyer may seek determination u/s 395(2) where the taxable portion is uncertain. Obtaining these approvals before completion of the transaction can significantly reduce excess tax deduction

What Should Be Included in the Sale Agreement?

To avoid disputes or confusion, the sale agreement should clearly specify:

• Who is responsible for deducting TDS.
• The applicable TDS rate.
• Whether a lower deduction certificate has been obtained.
• The form through which compliance will be completed.
• Timelines for issuing Form 132.
• A properly drafted clause can prevent post-transaction disputes and compliance issues.

Checklist for NRI Sellers Before Signing the Sale Agreement

1. Verify the Buyer’s Status : Determine whether the buyer is

• • Resident Individual

• • Resident HUF
  • Company
  • Partnership Firm

Only eligible resident individuals and HUFs can use the simplified PAN-based route.

2. Evaluate the Lower Deduction Option : Before registration:

• • Compute projected capital gains.
  • Collect purchase documents.
  • Consider applying for a lower deduction certificate.

3. Provide Schedule E Information : Keep ready

• • PAN
  • Passport details (if required)
  • Overseas address
  • Email address
  • Contact number
  • TRC and TIN details (where applicable)

4. Obtain Form 132 : After deduction of tax:

• • Collect Form 132 from the buyer.
  • Verify TDS reflects correctly in tax records.

5. Plan Refunds and Repatriation : Where excess TDS is deducted:

• • File the Indian Income-tax Return.
  • Claim the refund.
  • Complete applicable remittance formalities before transferring funds abroad.

Introduction of Schedule E in Form No. 141

To facilitate this simplified compliance framework, a dedicated Schedule E has been introduced in Form No. 141 for reporting property purchases from non-resident sellers. The schedule captures comprehensive details relating to the transaction, including:

Property Details

• Complete property address.
• Nature and type of property.

Buyer Details

• PAN.
• Name.
• Share in ownership.
• Share in consideration.

Seller Details

• Name.
• PAN (where available).
• Residential status.
• Contact details.
• Email address.
• Share of ownership.

Transaction Details

• Agreement date.
• Registration date.
• Sale consideration.
• Stamp duty value.
• Instalment/payment information.

TDS Information

• Nature of capital gains.
• Applicable TDS rate.
• Amount liable to deduction.
• TDS deducted.
• Date of deduction.

Where the seller does not possess an Indian PAN, additional overseas information may be required, such as:

• Foreign address.
• Tax Residency Certificate (TRC) details.
• Foreign Tax Identification Number (TIN).
• Country of tax residence.

Schedule E also permits reporting of details relating to any lower or nil deduction certificate obtained under the relevant provisions of the Income-tax Act.

Due Date for Filing Form No. 141 

After deducting tax, the buyer must

• Step 1: File Form No. 141: The form must be filed within 30 days from the end of the month in which TDS is deducted.
• Step 2: Issue TDS Certificate: After filing Form No. 141, the buyer must issue Form No. 132 to the non-resident seller. The certificate must be furnished within 15 days from the due date of Form No. 141.

Filing Timeline Under the New Regime

Activity	Timeline
Deduction of TDS	At the time of payment or credit, whichever is earlier
Filing Form No. 141 (Schedule E)	Within 30 days from end of month of deduction
Issue of Form No. 132	Within 15 days after due date of Form No. 141

Consequences of Non-Deduction

The amendment does not relax the consequences for failure to deduct TDS. If a buyer fails to deduct tax:

• The buyer may be treated as an assessee in default.
• Interest may become payable.
• Additional penalties and compliance consequences may arise under the Income-tax Act, 2025.

Key Takeaways

• From 1 October 2026, resident individuals and HUFs purchasing immovable property from a non-resident seller will no longer be required to obtain a TAN solely for complying with TDS provisions. Instead, TDS compliance can be completed through PAN-based Form No. 141 (Schedule E), significantly reducing the compliance burden for one-time property buyers.
• However, this amendment is purely procedural and does not remove the obligation to deduct and deposit TDS u/s 393(2) of the Income-tax Act, 2025. Here is summarized Changed is here under:

Particulars	Up to 30 September 2026	From 1 October 2026
TAN Requirement	Mandatory	Not Required
TDS Reporting	Quarterly Form No. 144	Form No. 141 (Schedule E)
Compliance Mode	TAN-Based	PAN-Based
Statement Filing	Quarterly	Single Transaction-Based Filing
TDS Certificate	Earlier System	Form No. 132
Deduction Obligation	Applicable	Continues Unchanged

• There remains no INR 50 lakh threshold for property purchases from NRIs, and TDS generally continues to be deducted on the gross sale consideration unless a lower deduction certificate is obtained. Buyers must file Form No. 141 within 30 days of the month of deduction and issue Form No. 132 to the seller thereafter.
• Failure to deduct TDS can still attract interest, penalties, and default consequences. Overall, the amendment simplifies reporting by replacing the TAN-based process with a PAN-based mechanism while keeping the underlying TDS liability unchanged.