If you are a resident Indian buying an immovable property from a non-resident Indian (NRI), you will soon have one less tax compliance hurdle to deal with.
Starting October 1, 2026, Indians will no longer be required to obtain a Tax Deduction and Collection Account Number (TAN) for such property transactions involving an NRI. This change, tax experts say, will significantly ease the process for Indians buying property from NRIs.
Under current rules, a resident buyer is not required to obtain a TAN when buying property from another resident. But the same transaction with an NRI seller triggers a mandatory TAN requirement to comply with withholding tax obligations.
TAN stands for Tax Deduction and Collection Account Number and is a 10-digit alphanumeric number. TAN must be obtained by all persons responsible for deducting tax at source or who are required to collect tax at source.
“The requirement often created delays and compliance friction for individuals undertaking one-off transactions,” said Sanjay Kumar, Director, Nangia Global.
The new rules have exempted resident individuals and Hindu Undivided Families (HUFs) from this requirement. Going forward, buyers will deposit the deducted tax using a PAN-based challan-cum-statement mechanism — similar in approach to Form 141 used for resident transactions.
Will TDS Apply?
But does dropping TAN mean no levy of TDS? It does not. “The obligation to deduct tax at source continues to remain, and buyers must ensure timely deduction and deposit of taxes, even in the absence of a TAN,” Kumar clarified.
The tax deduction will continue to be governed by Section 393 of the Income-tax Act, 2025, at the applicable capital gains tax rates for non-resident sellers — 12.5 percent (plus applicable surcharge and cess) for long-term capital gains, and slab rates for short-term gains, depending on the nature and holding period of the asset.
Importantly, the audit trail stays intact. Transactions will continue to be recorded through the PAN of both buyer and seller, and the tax credit will be reflected in the seller’s Form 168 and Annual Information Statement (AIS). “While the procedural requirement of obtaining a TAN has been dispensed with, the audit trail and reporting framework remain intact, preserving transparency and traceability of such transactions,” Kumar noted.
One concern for NRI sellers, however, remains unresolved. Since TDS is deducted on the gross consideration — not on the net capital gains — a significant portion of the sale proceeds can get blocked until a tax refund is processed. “This may result in significant cash flow being blocked for the non-resident seller,” Kumar said, adding that NRI sellers can still apply for a lower or nil withholding tax certificate to avoid excess deduction where justified.
Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Tax laws and regimes are subject to frequent changes by the government. Readers should verify details with official Income Tax Department notifications or consult a Chartered Accountant before making any financial decisions. Financial Express is not responsible for any decisions made based on this information.