NRI Property Purchase TDS Is Simpler from 1 October: PAN Replaces TAN for Eligible Buyers

From 1 October 2026, resident individuals and HUFs buying property from non-residents can use PAN and Form 141 instead of obtaining TAN. What still applies.

Published 2026-10-02T11:38:27.161Z

NRI Property Purchase TDS Is Simpler from 1 October: PAN Replaces TAN for Eligible Buyers

The quick answer

From 1 October 2026, a resident individual or Hindu Undivided Family (HUF) buying immovable property from a non-resident seller no longer needs to obtain a separate Tax Deduction and Collection Account Number (TAN) only for this transaction. The new compliance route allows eligible buyers to use their PAN and report the tax deducted at source through the prescribed Form 141 mechanism.

The important part: TDS itself has not disappeared. What has changed is the compliance route. Buyers still need to identify the seller's correct tax residency, deduct the applicable tax at the required time, deposit it and complete the prescribed reporting. The Income Tax Department's September update confirms Notification No. 121/2026 updates Forms 132 and 141 for non-resident property transactions.

What changed from 1 October 2026?

No separate TAN for eligible buyers: resident individuals and HUFs covered by the new rule can use PAN for the prescribed TDS compliance on an immovable-property purchase from a non-resident.
Form 141 is the reporting route: the amended form includes a dedicated schedule for these transactions.
Form 132 is aligned to the new process: the TDS certificate framework has also been updated.
The underlying tax obligation remains: the rule simplifies administration; it does not convert a non-resident property sale into the same tax treatment as a resident-seller transaction.

Who is affected?

The change is directly relevant to resident individuals and HUFs purchasing immovable property from a seller who is non-resident for Indian tax purposes. It is especially useful in resale transactions where the buyer may otherwise have had to obtain and maintain a TAN for what is often a one-off personal property purchase.

It does not mean every buyer type can ignore TAN. Companies, firms, LLPs and other entities should follow the compliance route applicable to them rather than assuming the individual/HUF relaxation applies.

Do not confuse “PAN instead of TAN” with “1% TDS”

This is the point most likely to cause expensive mistakes. A property purchase from a non-resident seller is not automatically subject to the simple resident-seller TDS treatment merely because the buyer can now use PAN instead of TAN.

The applicable withholding depends on the provisions governing payments to non-residents and, where relevant, the taxable amount and any valid lower or nil-deduction certificate. Buyers should therefore verify the correct withholding before releasing funds. The new rule removes an administrative step; it does not remove the need to calculate and deposit the correct tax.

What buyers should collect before the payment or registration stage

Confirm whether the seller is resident or non-resident for tax purposes for the relevant year; do not rely only on nationality, passport or where the seller currently lives.
Keep the buyer PAN details ready for the new PAN-based reporting process.
Collect the seller's PAN where available, contact information and overseas address required for the prescribed reporting.
Keep the agreement, payment schedule, property particulars and stamp-duty value documentation organised.
If the seller relies on a lower or nil-deduction certificate, verify the certificate details and its applicability before using the lower rate.
Coordinate the TDS timeline with the payment and registration schedule rather than leaving the tax step until after funds have moved.

Why this matters for homebuyers and loan-backed purchases

For a buyer using a home loan, the tax and registration sequence can sit alongside lender legal checks, own-contribution requirements and disbursement conditions. Removing a separate TAN application can reduce one procedural dependency, but it does not replace the lender's property, title or payment-document requirements.

Before the final disbursement or registration date, borrowers should align the sale agreement, seller residency documents, TDS computation, payment schedule and lender disbursement instructions. A tax-processing simplification is helpful only if the rest of the transaction file is also ready.

What has not changed

The buyer still has a responsibility to deduct tax where the law requires it.
The seller's non-resident status still matters.
The applicable withholding is not automatically the resident-seller rate.
Property title, encumbrance, registration, RERA and lender legal checks remain separate from tax compliance.
A PAN-based process does not by itself determine the seller's final capital-gains tax liability.

Practical closing checklist

Confirm the seller's tax residency.
Confirm which withholding provision applies to the payment.
Check whether any lower/nil-deduction certificate applies.
Prepare buyer and seller PAN/contact details and property particulars.
Match the TDS timing to each payment or credit event.
Complete the prescribed Form 141 reporting and retain the acknowledgement.
Issue/retain the prescribed TDS certificate documentation.
Keep the tax records with the sale deed, payment proofs and lender file.

For Bengaluru and other high-NRI resale markets

The change can be particularly useful in cities with active resale markets and a significant number of overseas owners. A buyer looking at a Bengaluru apartment, for example, may now avoid obtaining a separate TAN purely for this purchase if the buyer fits the new individual/HUF rule. That can remove one administrative step, but buyers should still complete title and lender checks independently.

Useful RiteAssetz resources include the loan eligibility calculator, the property-title verification guide and the power-of-attorney property purchase guide.

What to watch next

Buyers and advisers should watch the Income Tax e-filing portal for the operational filing flow, utilities and any further clarifications around Form 141 and related certificates. The procedural change is now effective, but transaction-specific questions can still arise in joint ownership, instalment payments, missing PAN cases or transactions involving a lower-deduction certificate.

Bottom line

From 1 October 2026, eligible resident individuals and HUFs buying immovable property from a non-resident seller have a simpler compliance path: PAN can replace the separate TAN requirement for this purpose, with Form 141 used for the prescribed reporting. The tax deduction itself remains. Buyers should treat the change as paperwork simplification, not as a reduction in the underlying TDS obligation.

If you are planning a financed property purchase, RiteAssetz can help you organise the borrowing side of the transaction—eligibility, EMI comfort and document readiness—while tax and legal compliance should be verified for the specific deal.