Selling property in India as an NRI? Know these special tax rules, TAN requirements

NRIs must follow special tax rules when selling property in India. These differ from the rules for resident Indian sellers.

For NRI sellers, there is no minimum amount for TDS deduction. Resident sellers get a ₹50 lakh limit before TDS applies. Their property sales usually attract TDS of 1%under Section 194-IA.

However, TDS on property sold by an NRI can be much higher. Buyers must understand three main issues before completing the purchase. These cover capital gains, TAN requirements and proof of TDS payment.

The first issue is the type of capital gain. The gain can be long-term or short-term. This classification decides the applicable TDS rate. A sale after two years creates long-term capital gains. A sale within two years creates short-term capital gains.

Chartered Accountant Suresh Surana explained the applicable rates to The Economic Times. He referred to Section 393(2) of the Income-tax Act, 2025. Long-term capital gains are subject to TDS at 12.5%. Surcharge and cess must be added to this rate.

Short-term capital gains are subject to the NRI seller’s income-tax slab rate. Surcharge and cess also apply here. The buyer must calculate and deduct the correct amount. There is no minimum transaction limit for property sold by NRIs.

The second issue involves obtaining a TAN. TAN means Tax Deduction and Collection Account Number.

The third issue involves proof of the TDS payment. The buyer may need this proof during property registration. Without the right proof, the registrar may refuse registration.

Neeraj Agarwala, Senior Partner at Nangia & Co LLP, explained the registration rules to ET Wealth Online. Many state sub-registrar offices ask for proof of TDS payment. The buyer may need to provide a TDS certificate.

This certificate applies when a lower or zero deduction gets approval. Officials may instead ask for a TDS challan. Some offices may ask for both documents. These documents show that the buyer has paid the required TDS.

TAN requirement changes

The sale date also affects the buyer’s compliance process. The current TAN process applies before 1 October 2026. For earlier sales, the buyer must get a TAN. The buyer is responsible for deducting and depositing the tax. The buyer must also complete the required tax filings.

According to Surana, buyers must file Form 144 under the Income-tax Rules, 2026. This matches Form 27Q under the Income-tax Rules, 1962.

Budget 2026 removed the TAN requirement for certain property purchases. However, the change starts only on 1 October 2026. Therefore, earlier sales must follow the existing TAN process.

The change comes under Section 397(1)(c) of the Income-tax Act, 2025. The Finance Act, 2026, amended this section. The change covers resident individuals and Hindu Undivided Families.

These buyers deduct tax while purchasing immovable property from NRIs. The relevant rule appears under Section 393(2), Table Serial Number 17.

Eligible buyers can use their PAN to deposit TDS after the change. They will not need a separate TAN. The PAN facility begins on 1 October 2026. Therefore, the transaction date is very important.