Buying property from an NRI gets easier from October 1: Check key rule changes for residents and HUFs

Resident individuals and Hindu undivided families (HUFs) buying property from non-resident sellers will face less paperwork from October 1, as they will no longer need to obtain a separate Tax Deduction and Collection Account Number (TAN) solely to comply with the TDS requirement.

The change will ease the procedural burden for individuals who would otherwise have needed a separate TAN for what could be a one-off property transaction. However, the TDS (tax deducted at source) obligation remains unchanged

Buyers will still be responsible for deducting the applicable tax and depositing it with the government. The key change is in how they will comply with this requirement from October 1, 2026, which is just days away.

What changes from October 1?

After the revision, eligible resident individuals and HUFs will be able to comply with the TDS requirement by using their existing PAN, instead of obtaining a separate TAN for the property transaction. The Finance Ministry has introduced a PAN-based compliance mechanism through an amended Form 141.

The amended form includes a dedicated Schedule E for reporting TDS on the purchase of immovable property from a non-resident. Once the TDS is deducted and deposited, buyers will also have to issue the prescribed TDS certificate, Form 132, to the non-resident seller.

What all needs to be included in Schedule E?

Schedule E requires buyers to provide detailed information about the transaction, including property address and type, details of all buyers and sellers involved, the seller’s residential status, their overseas address, contact details, email ID and PAN (where available), according to a report by Business Today.

It also asks for other transaction-related details such as the date of the agreement, registration date, stamp duty value, total sale consideration and whether the payment is being made in a lump sum or instalments. If the transaction falls in the latter category, then buyers must indicate whether the payment is first, subsequent or final instalment, as well as provide the previous acknowledgement number (where applicable), the report stated.

For each NRI seller, Schedule E requires buyers to report details such as the amount paid or credited, date of payment, amount liable for TDS, applicable TDS rate and tax deducted. Buyers must also report the certificate number if they have obtained a certificate under the relevant provisions.

What if NRI seller doesn’t have PAN?

If the non-resident seller does not have a PAN, the new mechanism also provides for specified foreign contact details, overseas address, tax residency certificate details and foreign tax identification number.

How the new TDS process will work

The revised mechanism has two key steps that must be followed by the buyers during the property transaction:

Step 1: The buyer will have to report the transaction through Form 141 and deposit the TDS deducted from the payment to the non-resident seller with the government within the prescribed timeline.

Step 2: After filing Form 141, the buyer has to issue Form 132 to the non-resident seller. This will serve as the TDS certificate for the transaction.

The revised process removes the need for a separate TAN, but buyers must still deduct, deposit and report TDS correctly.