TDS on Property Purchase from NRI: No TAN Needed from 1 October 2026, How Form 141 Works
From 1 October 2026, a resident individual or Hindu undivided family (HUF) buying property from a non-resident no longer needs a Tax Deduction and Collection Account Number (TAN) to handle the TDS. The buyer can now deduct, deposit and report TDS on property purchase from NRI sellers using their own PAN, through an amended Form 141 with a new Schedule E, and then issue Form 132 to the seller as the TDS certificate. The change comes from CBDT Notification No. 121/2026 (G.S.R. 830(E)) dated 22 September 2026, which notifies the Income-tax (Fifth Amendment) Rules, 2026.
The obligation itself is unchanged: the buyer must still deduct tax from every payment to the seller and deposit it on time. Only the paperwork is simpler.
What changes for TDS on property purchase from NRI sellers
Until 30 September, a resident buying a flat from an NRI was treated like any other person making a payment to a non-resident. That meant applying for a TAN, paying the tax by challan, filing a quarterly TDS statement and issuing a certificate, all for what is usually a one-off purchase. The new rules move this into the same PAN-based challan-cum-statement route that buyers already use when the seller is a resident.
| Step | Tax deducted up to 30 Sep 2026 | Tax deducted from 1 Oct 2026 (resident individual/HUF buyer) |
|---|---|---|
| TAN | Required | Not required |
| Paying the tax | Challan, within 7 days of the end of the month of deduction (30 April for March) | With Form 141, within 30 days of the end of the month of deduction |
| Statement | Quarterly TDS statement for non-resident payments (Form 144) | Transaction-wise Form 141, Schedule E |
| Certificate to seller | Form 131 | Form 132, within 15 days of the Form 141 due date |
| TDS rate | Rates in force | Unchanged |
The deadlines come from the amended rules 215, 218 and 219 of the Income-tax Rules, 2026, as set out in the CBDT notification and explained by TaxUpdate India.
Who can use the route without TAN?
Only resident individuals and resident HUFs can handle TDS on property purchase from NRI sellers without TAN. A company, firm, LLP or trust buying from an NRI still needs a TAN and files the regular quarterly return. The property must be immovable property other than agricultural land: land, a building or part of a building, or both, as the new schedule lists. If two or more people buy jointly, each buyer is treated as a separate deductor; Note 11 to Form 141 says each deductor has to file a separate form.
What is the rate of TDS on property purchase from NRI sellers?
When the seller is a resident, TDS is 1% of the consideration or stamp duty value, whichever is higher, and only where the value is ₹50 lakh or more, under section 393(1) [Table: Sl. No. 3(i)] of the Income-tax Act, 2025. A purchase from a non-resident falls under section 393(2) [Table: Sl. No. 17], which covers “any other sum chargeable” paid to a non-resident and prescribes deduction at the “rates in force”. The text of section 393 is on the Income Tax Department’s website.
There is no ₹50 lakh threshold. A ₹30 lakh flat bought from an NRI attracts TDS just as a ₹3 crore one does.
The rate depends on the seller’s gain. Schedule E asks whether the gain is long-term or short-term. For long-term capital gains, the base rate is 12.5%, according to TaxUpdate India’s reading of the Act. Short-term gains are taxed at the rates in force for the seller, so the buyer needs the seller’s details, or a chartered accountant’s help, to fix the rate. Note 10 to the amended Form 141 confirms that the tax deducted “shall include surcharge, if applicable, and cess”.
The tax is usually deducted on the full sale price rather than only the profit. The seller can apply for a lower or nil deduction certificate under section 395(1) if the actual gain is small, and Schedule E has fields for that certificate number. The buyer can separately apply under section 395(2) for the officer to determine the chargeable portion.
A worked example
Here is how TDS on property purchase from NRI sellers works out in a typical deal. Say a resident couple buys a flat for ₹80 lakh from an NRI who has owned it for eight years, and the seller has no lower deduction certificate. Tax practitioners’ rate charts put surcharge at 10% where the amount is between ₹50 lakh and ₹1 crore, capped at 15% for such long-term gains, plus 4% health and education cess. That gives an effective rate of 14.3% (12.5% × 1.10 × 1.04).
| Item | Amount |
|---|---|
| Sale consideration | ₹80,00,000 |
| Effective TDS rate (long-term gain) | 14.3% |
| Total TDS | ₹11,44,000 |
| Each buyer’s share, if they pay 50:50 and file separate Form 141s | ₹5,72,000 |
| Amount paid to the seller | ₹68,56,000 |
If the NRI obtains a section 395 certificate, the buyer deducts at the rate or amount it specifies instead. Buyers unsure of the surcharge slab should get a chartered accountant to confirm the figure before the first payment.
How to file Form 141 Schedule E: step by step
Collect these details before the payment date, since Form 141 Schedule E asks for all of them:
- Address and type of the property.
- PAN, name and percentage share of every buyer.
- For every seller: PAN if available, name, status, contact number, email, address abroad, tax residency certificate number, foreign tax identification number and percentage share.
- Date of agreement, date of registration if available, stamp duty value and total consideration.
- Whether payment is a lump sum or in instalments, and for later instalments, the acknowledgement number of the earlier Form 141.
Then, for each payment: deduct the tax, file Form 141 with Schedule E and pay the tax on the income tax e-filing portal within 30 days from the end of the month of deduction, and download and issue Form 132 to the seller within 15 days of that due date. For a deduction on 10 October 2026, Form 141 and the payment are due by 30 November 2026, and Form 132 by 15 December.
Tax has to be deducted on every instalment, including a token advance, and not only on the final payment at registration.
What if the NRI seller has no PAN?
Without a PAN, the law requires deduction at the higher of the applicable rate or 20%. Rule 217 switches this off if the seller provides a name, email, contact number, overseas address, a tax residency certificate where the country issues one, and a tax identification number. The amended notes to Form 141 make the seller’s contact number, email and overseas address mandatory whether or not a PAN is available.
Common mistakes to avoid
Applying the 1% resident-seller rate to an NRI seller is the costliest error in TDS on property purchase from NRI deals. The shortfall becomes the buyer’s problem: TaxUpdate India points out that section 448 of the new Act allows a penalty equal to the tax not deducted, on top of interest.
Checking residential status late is the next. The seller’s status for the tax year of transfer decides which section applies, so it should be settled before the agreement. Buyers who have already paid part of the price under a TAN in September should note that tax deducted before 1 October follows the old route, and the rules do not spell out how an ongoing transaction switches over; TaxUpdate suggests confirming the portal’s treatment before the first October instalment.
Our Hindi explainer TDS kya hai covers the basics. Sellers who end up with excess TDS can claim it back in their return, and our guide to income tax refund status explains how to track it. Buyers funding the purchase with a loan can check limits in our home loan eligibility guide.
FAQ
Do I still need a TAN to buy property from an NRI after 1 October 2026?
No, if you are a resident individual or HUF. You can handle TDS on property purchase from NRI sellers with your PAN through Form 141.
Is there a ₹50 lakh threshold when the seller is an NRI?
No. The ₹50 lakh threshold and the 1% rate apply only when the seller is a resident.
Which certificate do I give the NRI seller?
Form 132, downloaded from the income tax portal, within 15 days of the Form 141 due date.
We are two buyers. Do we file one form?
No. Each buyer files a separate Form 141 for their share of the payment.
TDS on property purchase from NRI sellers is now a single online filing for most home buyers, though the rate calculation still needs care.
Disclaimer: This article explains the rules as notified by CBDT on 22 September 2026 and is general information, not tax advice. The TDS rate in a specific deal depends on the seller’s status, holding period and any certificate issued; consult a chartered accountant.
